The Reserve Bank of India (RBI) has imposed a fine of Rs 11 lakh on The Jammu and Kashmir State Co-operative Bank Limited, Srinagar on September 23, 2021, for disobeying Section 23 read with Section 56 of the Banking Regulation Act, 1949. The Reserve Bank says that the penalty is imposed in exercise of the powers conferred on RBI under the provisions of Section 47A(1) (C) read with Section 46 (4) (i) Section 56 of the Banking Regulation Act, 1949.
This action is based on deficiencies in regulatory compliance, which is not intended to question the validity of any transactions or agreements made by the bank with its customers. The statutory inspection report conducted by the NABARD on 31st March 2019 in the context of its economic condition has revealed that the bank has violated Section 23 with Section 56 of the Banking Regulation Act, 1949, as the bank has opened branches without seeking prior approval of the RBI.
On the basis of the said, a notice has been issued to the bank asking them to give reasons as to why they should not be punished for violating the said directions. After considering the bank’s reply, RBI has come to the conclusion that violations of Section 23 read with Section 56 of the Banking Regulation Act, 1949 have proved the above allegations.