DCC pays Rs 5 lakh penalty to RBI

Reserve Bank objected to Co-ops move of investing in Mutual Funds

The Bank has been served with a show cause notice in this regard.

DCC Bank President Mathanda A Ramesh has confirmed the news and said that the bank had invested over Rs 60 crore in mutual funds during last financial year. The RBI had directed the bank to withdraw the money invested in Mutual Fund before March 31, which was not followed by the bank. The penalty has been imposed for not adhering to the direction.

“In March the share market was dull and the maturity period of the mutual fund had not barred. In such a situation, if we withdrew the amount, the bank would have lost over Rs 3.20 crore. Hence we thought it would be feasible not to withdraw the amount,” he said.

He added that the Bank had brought the issue to the notice of the RBI and said that the Bank would withdraw the amount step by step and not in one go.

“We had asked for some more time, which RBI denied. However, after March, we started withdrawing the amount from mutual fund step by step. By June end, we had withdrawn Rs 44 crore and remaining Rs 16 crore will be withdrawn by this month end,” he said.

Request

Ramesh said that the bank has paid the penalty of Rs five lakh along with a request to the Reserve Bank of India to re consider the decision of penalising the bank as the bank had not followed the direction only to save the bank from facing the  loss.