These actions on 4 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, February 9, 2024: The Reserve Bank of India (RBI) has, by separate orders in January, 2024 and February, 2024, imposed a monetary penalty on 4 Co-operative banks. These actions on 4 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on February 8, 2024.
RBI has imposed monetary penalty on Navnirman Co-operative Bank Ltd., Ahmedabad, Gujarat; Bombay Mercantile Co-operative Bank; Zoroastrian Co-operative Bank and Nakodar Hindu Urban Cooperative Bank.
1 The Reserve Bank of India (RBI) has, by an order dated January 19, 2024, imposed a monetary penalty of ₹1.00 lakh (Rupees One lakh only) on The Navnirman Co-operative Bank Ltd., Ahmedabad, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Loans and Advances to directors, relatives and firms/concerns in which they are Interested’ read with ‘Loans and Advances to Directors etc. - Directors as surety/guarantors – Clarification’. 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 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 (select scope) of the bank conducted by RBI with reference to its financial position as on March 31, 2022, and examination of the Inspection Report and all correspondence related thereto revealed, inter alia, that the bank had sanctioned loans where relative of the director of the bank stood as guarantor. 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.
2 The Reserve Bank of India (RBI) has, by an order dated February 6, 2024, imposed a monetary penalty of ₹63.30 lakh (Rupees Sixty-Three Lakh and Thirty Thousand only) on Bombay Mercantile Co-operative Bank Ltd. (the bank) for non-compliance with the directions issued by RBI on ‘Exposure Norms and Statutory / Other Restrictions – UCBs’, ‘Gold Loan – Bullet Repayment - UCBs’ and ‘Unclaimed Deposits and Inoperative/ Dormant Accounts in UCBs’. 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 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 inspections of the bank conducted by RBI with reference to its financial position as on March 31, 2021 and March 31, 2022, and examination of the Risk Assessment Reports, Inspection Reports and all correspondence related thereto revealed, inter alia, that the bank had (i) sanctioned and disbursed loans to nominal members exceeding the regulatory ceiling of ₹1.00 lakh, (ii) sanctioned and disbursed gold loans with bullet repayment option, exceeding the regulatory ceiling of ₹2.00 lakh, and (iii) recovered charges for activation of inoperative accounts, claiming it to be reimbursement of expenses for such activation. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the RBI directions, as stated therein.
After considering the bank’s reply to the notice, the additional submissions made by it and oral submissions made 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.
3 The Reserve Bank of India (RBI) has, by an order dated February 6, 2024, imposed a monetary penalty of ₹43.30 lakh (Rupees Forty-Three Lakh and Thirty Thousand only) on Zoroastrian Co-operative Bank Ltd. (the bank) for non-compliance with the directions issued by RBI on ‘Maintenance of Deposit Accounts’, ‘Interest Rate on Deposits’ and ‘Frauds in UCBs: Changes in Monitoring and Reporting mechanism’. 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 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 inspections of the bank conducted by RBI with reference to its financial position as on March 31, 2021 and March 31, 2022, and examination of the Risk Assessment Reports, Inspection Reports and all correspondence related thereto revealed, inter alia, that the bank had (i) recovered penal charges from Savings Bank accounts for non-maintenance of minimum balances therein without notifying the depositors, (ii) not paid interest on balances lying in the current accounts of deceased individual depositors / proprietorship concerns from the date of their death till the date of repayment of such balances to their claimants and (iii) reported a fraud with delay. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the RBI directions, as stated therein.
After considering the bank’s reply to the notice, its additional submissions and oral submissions made 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.
4 The Reserve Bank of India (RBI) has imposed, by an order dated February 03, 2024, a monetary penalty of ₹6.00 lakh (Rupees Six lakh only) on The Nakodar Hindu Urban Cooperative Bank Ltd., Nakodar (the bank) for non-compliance with the directions issued by RBI on Income Recognition, Asset Classification, Provisioning and Other Related Matters (IRAC Norms) and specific directions issued by RBI under Supervisory Action Framework (SAF). 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 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 Inspection Report, Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) failed to adhere to IRAC norms, and (ii) paid dividend, sanctioned/renewed loans exceeding 50% of applicable regulatory limit for single borrower exposure, incurred capital expenditure exceeding the prescribed limit and incurred operating expenditure by granting gifts, in violation of specific directions issued under SAF. 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 aforesaid charge of non-compliance with the RBI directions was substantiated and warranted imposition of monetary penalty on the bank.
