The Reserve Bank of India (RBI) has imposed a fine on Odisha Gramya Bank for violation of rules. According to a press release issued by RBI, a monetary penalty of Rs 1.5 lakh has been imposed on this cooperative bank. On May 6, the RBI said the penalty has been imposed for non-compliance with the directions issued on ‘Strengthening of Prudential Norms-Provisioning, Asset Classification and Exposure Limits’ and ‘Regular Rural Banks’
RBI in Action: Reserve Bank of India (RBI) has imposed a fine on Odisha Gramya Bank for violation of rules. According to a press release issued by RBI, a monetary penalty of Rs 1.5 lakh has been imposed on this cooperative bank. On May 6, the RBI said the penalty has been imposed for non-compliance with the directions issued on ‘Strengthening of Prudential Norms-Provisioning, Asset Classification and Exposure Limits’ and ‘Regular Rural Banks’. RBI said that the financial health of this cooperative bank till March 31, 2023 was statutory inspected by the National Bank for Agriculture and Rural Development (NABARD).
What happened after the investigation?
NABARD’s investigation revealed that some RBI guidelines were not followed. In such a situation, a ‘show cause notice’ was sent to the cooperative bank asking why penalty should not be imposed on it for not following the guidelines? The central bank further said that the penalty was imposed after considering the written and oral response of Odisha Gramya Bank to this notice. This action was taken against Odisha Gramya Bank because investigation revealed that it did not keep certain loan accounts in NPA, due to which the correct picture of the asset classification of the loan accounts was not revealed.
About Odisha Gramya Bank
Odisha Gramya Bank is a regional rural bank which was established on 7 January 2013 by merging Neelachala Gramya Bank, Kalinga Gramya Bank and Baitarani Gramya Bank in accordance with the provisions of the Regional Rural Banks Act 1976. Its sponsor is Indian Overseas Bank. It is owned by the Government of India, Government of Odisha and IOB. Government of India has 50 percent stake in it, Indian Overseas Bank has 35 percent stake and Odisha Government has 15 percent stake. The business of this cooperative bank is spread in 13 districts of Odisha state.
