RBI imposed a penalty of Rs 56 lakh on The Nainital Bank, Uttarakhand, for non-compliance with certain norms related to classification of non-performing assets and frauds.
The Reserve Bank of India (RBI) on Friday said it has imposed a penalty of ₹ 56 lakh on The Nainital Bank, Uttarakhand, for non-compliance with certain norms related to classification of non-performing assets and frauds.
The central bank had conducted a Statutory Inspection for Supervisory Evaluation (ISE) of the lender with reference to its financial position as on March 31, 2019 and found non-compliance with certain directions.
There was a divergence between bank’s reported NPAs and NPAs assessed during the inspection on account of failure to classify certain borrower accounts as NPA. There was also a failure to disclose material divergences relating to asset classification and provisioning identified by the RBI, despite exceeding the defined threshold, in the Notes to Accounts, the RBI said in a statement.
There was also a failure on the part of the bank to report frauds as per the RBI directions. The RBI, however, said the action against The Nainital Bank is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.