Page 9 - Banking Finance February 2022

RBI CORNER

Reserve Bank News

Co-op societies can't use the RBI for doing banking business," in regulatory compliance and is not
RBI said. intended to pronounce upon the valid-
'bank' in their names: RBI ity of any transaction or agreement
Further, the insurance cover from De-
The RBI cautioned the public against posit Insurance and Credit Guarantee entered into by the bank with its cus-
co-operative societies using 'bank' in tomers," it added.
Corporation (DICGC) is also not avail-
their names as well as accepting de- able for deposits placed with these so- The Statutory Inspection for Supervi-
posits from people who are not their
cieties. sory Evaluation (ISE) of Punjab National
members. Bank was conducted by RBI with ref-
Members of the public are advised to
After the amendment in the Banking exercise caution and carry out due dili- erence to its financial position as on
Regulation Act, 1949, effective Sep- gence of such co-operative societies if March 31, 2019 and the examination
tember 29, 2020, co-operative societ- they claim to be a bank, and look for of the Risk Assessment Report, the
ies cannot use the words "bank", banking license issued by RBI before Annual Review of implementation of
"banker" or "banking" as part of their dealing with them, the central bank Exposure Management Measures for
names, except as permitted under the said. Financial Year 2019-20 carried out by
provisions or by the Reserve Bank of RBI during July 2020 and all related
India (RBI). correspondence pertaining to the
RBI imposes Rs.1.8 crore same, revealed, inter-alia, contraven-
In a statement, RBI said it has come penalty on Punjab Na- tion of sub-section (2) of section 19 of
to notice that some cooperative soci- the Act to the extent the bank held
eties are using the word 'bank' in their tional Bank shares in borrower companies, as

names in violation of the Banking Regu- The Reserve Bank of India (RBI) im- pledgee, of an amount exceeding
lation Act. posed Rs.1.8 crore monetary penalty thirty per cent of paid-up share capi-
It has also come to the notice of RBI on Punjab National Bank (PNB) for 'de- tal of those companies.
that some co-operative societies are ficiencies in regulatory compliance'.
accepting deposits from non-mem- "The Reserve Bank of India (RBI) has, RBI goes slow on liquidity
bers/ nominal members/ associate by an order dated December 15, 2021, OPS
members which is tantamount to con- imposed a monetary penalty of Rs.1.80 The Reserve Bank of India (RBI) posi-
ducting banking business in violation of crore on Punjab National Bank (the tively surprised the bond markets by
the provisions. bank) for contravention of sub-section going slow on its liquidity absorption
(2) of section 19 of the Banking Regu-
"Members of the public are hereby mode, possibly indicating its readiness
informed that such societies have nei- lation Act, 1949 (the Act), the RBI said to not rush towards normalisation
ther been issued any licence under BR in a statement. amid a pandemic scare. Generally, the
Act, 1949 nor are they authorised by "This action is based on the deficiencies central bank has been rolling over its

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