The Reserve Bank of India (RBI) recently imposed a monetary penalty on three banks -₹1.50 lakhs on Dr. Ambedkar Nagarik Sahakari Bank Maryadit, ₹25,000 on Nagarik Sahakari Bank Maryadit, and ₹1 lakh on Ravi Commercial bank for violating the provisions of its regulations. The banking regulator has imposed a monetary penalty for contravention of non-compliance with the directions issued to Ravi commercial bank an exposure norms and statutory and other restrictions & KYC.

How does RBI act as a supervisor to bank?

Inspection & imposing penalty

Among the given options, the correct answer is Inspection & imposing penalty.

The Reserve Bank of India (RBI) plays a crucial role in overseeing and regulating the Indian banking system, ensuring its stability, efficiency, and adherence to sound banking practices. One of the primary ways the RBI fulfills this supervisory role is through inspection and imposing penalties.

The RBI conducts regular inspections of banks to assess their financial health, compliance with regulations, and risk management practices. These inspections allow the RBI to identify potential problems early on and take corrective measures to prevent them from escalating into larger issues.

In cases where banks fail to comply with regulations or engage in risky practices, the RBI has the authority to impose penalties. These penalties can serve as a deterrent to future violations and protect the interests of depositors.

The RBI's supervisory role extends beyond inspections and penalties. It also issues various guidelines and regulations to govern the operations of banks, promotes financial inclusion, and enhances consumer protection.

Therefore, the RBI's role as a supervisor to banks encompasses inspection, imposing penalties, issuing guidelines, promoting financial inclusion, and enhancing consumer protection. These measures contribute to a sound and stable banking system that supports economic growth and protects the interests of depositors.