The Reserve Bank of India (RBI) has imposed a fine of Rs 8 lakh on the state-run Power Finance Corporation Limited (PFC) due to non-compliance with certain provisions. This penalty stems from an inspection conducted on the company's financial position as of March 31, 2022. The examination of the risk assessment report revealed that PFC had failed to maintain the Liquidity Coverage Ratio (LCR) of 60 percent as required. This shortfall was attributed to the inclusion of ineligible assets as High-Quality Liquid Assets (HQLA) for computing the LCR.
Following this discovery, the RBI issued a notice to PFC, prompting the company to explain why a penalty should not be imposed for its failure to adhere to RBI directives. After reviewing PFC's response, along with additional submissions and oral presentations during a personal hearing, the RBI concluded that the non-compliance warranted the imposition of a monetary penalty.
In another regulatory action, the RBI has revoked the license of Maharashtra-based 'Jai Prakash Narayan Nagari Sahakari Bank Ltd.' Consequently, the bank will cease its banking operations effective from the close of business on February 6, 2024. The RBI cited inadequate capital and earning prospects as reasons for the license cancellation, stating that the bank's continuation poses a risk to the interests of its depositors.
Moreover, the RBI expressed concerns about the bank's inability to pay its depositors in full given its current financial position. Consequently, it determined that allowing the bank to continue operating would be detrimental to public interest. In light of these circumstances, the RBI has requested the Commissioner for Co-operation and Registrar of Cooperative Societies, Maharashtra, to initiate the winding-up process for the bank and appoint a liquidator.
These regulatory actions underscore the RBI's commitment to enforcing compliance and safeguarding the stability of the banking sector. Compliance with regulatory requirements is essential to maintaining the integrity and trustworthiness of financial institutions and protecting the interests of depositors.
