MM TAX CLUB

The Reserve Bank of India (RBl) has, by an order dated January 08, 2024, imposed a monetary penalty of ₹50,000/- (Rupees Fifty thousand only) on Mula Sahakari Bank Ltd., Sonai, Dist. Ahmednagar (Maharashtra) (the bank) for non-compliance with the directions issued by RBI on ‘Exposure Norms and Statutory/Other Restrictions - UCBs’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

This action is based on deficiency 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.

Background

The statutory inspection of the bank conducted by RBI with reference to its financial position as on March 31, 2022, and examination of the Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had breached inter-bank counterparty exposure limit. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions, as stated therein.

After considering the bank's reply to the notice and oral submissions made by it during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank.

The Reserve Bank of India (RBl) has, by an order dated January 08, 2024, imposed a monetary penalty of ₹5.00 lakh (Rupees Five lakh only) on Dr. Panjabrao Deshmukh Urban Co-operative Bank Limited, Amravati, Maharashtra (the bank) for contravention of specific directions issued by RBI under Supervisory Action Framework (SAF), and non-compliance with the RBI Directions on ‘Management of Advances-UCBs’ and This penalty has been imposed in exercise of powers conferred on RBI under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

This action is based on 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.

Background

The statutory inspection of the bank conducted by RBI with reference to its financial position as on March 31, 2022, and examination of the Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) sanctioned fresh loans and advances carrying risk weight of more than 100% in violation of specific directions issued under SAF, (ii) sanctioned gold loans under the Bullet Repayment Scheme beyond the regulatory limit, (iii) not conducted periodic updation of KYC as per risk categorization of customers, (iv) not conducted periodic review of risk categorization of accounts; and (v) not put in place a robust software to throw alerts as part of effective identification and reporting of suspicious transactions. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions, as stated therein.

After considering the bank's reply to the notice and oral submissions made by it during the personal hearing and additional submissions made thereafter, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank.

  Based on an assessment of the prevailing and evolving liquidity conditions, the Reserve Bank of India has decided that an additional aggregate amount of ₹5,000 crore will be made available to the Standalone Primary Dealers (SPDs) under the Standing Liquidity Facility at the prevailing repo rate starting from January 31, 2024. The incremental limit for individual SPDs is being conveyed to them separately. All other terms and conditions of the facility shall remain unchanged. 

Directorate of Enforcement (ED) has provisionally attached assets worth Rs. 58.82 Crore [investment held with various fund managers/ deposits with corporates] belonging to Padam Singhee, Promoter of M/s SVOGL Oil Gas & Energy Limited and M/s Max Tech Oil & Gas Services Pvt Ltd., New Delhi on 25-01-2024, under the provisions of the Prevention of Money Laundering Act (PMLA), 2002.

ED initiated investigation on the basis of two FIRs registered by the CBI against M/s SVOGL Oil Gas & Energy Limited, M/s Max Tech Oil & Gas Services Pvt Ltd, Prem Singhee, Padam Singhee and others. As per the said FIRs, Prem Singhee and Padam Singhee along with others cheated banks to the tune of Rs.252 Crore [availed from Punjab National Bank in the name of M/s SVOGL Oil Gas & Energy Limited] and Rs. 65 Crore [availed from Bank of India in the name of M/s Max Tech Oil & Gas Services Pvt Ltd.].

ED investigation revealed that money was transferred to various shell/ dummy companies in guise of expenses and was siphoned off by the promoters. The accused persons also made investments which were unconnected to the intended purposes of bank loans.

ED had conducted search operations on the group entities/ persons on 15-12-2023. During search, evidences relating to fictitious transactions and transactions with shell entities were recovered.

Details of several investments in shares and immovable properties were also found.

The attached assets were held in the name of shell companies controlled by Padam Singhee.

The details of the shell companies were unearthed during the search and post search investigations.         

Further investigation is under progress.