The penalty was imposed after the Odisha Gramya Bank’s non-compliance with two RBI circulars on the classification of assets and the determination of NPAs.
The bank was issued a notice by the National Bank for Agriculture and Rural Development (NABARD) on 31 March 2023, asking it to explain why a penalty should not be imposed for its non-compliance. The bank submitted a reply to the notice and also made oral submissions during a personal hearing.
After considering the bank’s submissions, the RBI found that the charge of failure to classify certain loan accounts as NPA was supported by evidence, warranting the penalty on the bank.
The decision to impose the Rs 1,50,000 fine on the bank is not intended to pronounce upon the validity of any transaction or agreement between the bank and its customers, the RBI statement added.