These actions on 5 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, January 5, 2024: The Reserve Bank of India (RBI) has, by separate orders in December, 2023, imposed a monetary penalty on each of 5 Co-operative banks. These actions on 5 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on January 4, 2024.
RBI has imposed monetary penalty on Co-operative Urban Bank, Parlakhemundi, Odisha; Shree Bharat Co-operative Bank Limited, Vadodara, Gujarat; Limdi Urban Co-operative Bank Limited, Limdi, dist. Dahod, Gujarat The Sankheda Nagarik Sahakari Bank Limited, Sankheda, Dist. Chhotaudepur, Gujarat and Bhuj Commercial Co-operative Bank Limited, Dist. Kachchh, Gujarat.
1 The Reserve Bank of India (RBI) has, by an order dated December 07, 2023, imposed a monetary penalty of Rs.1.50 lakh (Rupees One lakh Fifty thousand only) on The Co-operative Urban Bank Limited, Parlakhemundi (the bank) for non-compliance with the directions issued by RBI on ‘Membership of Credit Information Companies (CICs)’ and ‘Exposure Norms and Statutory/Other Restrictions - UCBs’. This penalty has been imposed in exercise of powers conferred on RBI under Section 25(1)(iii) read with Section 23(4) of the Credit Information Companies (Regulation) Act, 2005 (CIC Act) and Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 (BR Act).
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 upload credit information to CICs, (ii) breached the prudential inter-bank (gross) exposure limit; and (iii) breached the prudential inter-bank counter-party 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 non-compliance with the aforementioned directions, as stated therein.
After considering the bank’s reply to the notice, additional submissions 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 December 13, 2023, imposed a monetary penalty of Rs.5.00 lakh (Rupees Five lakh only) on Shree Bharat Co-operative Bank Limited, Vadodara, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’. 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 Inspection Report, Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) breached the prudential inter-bank gross exposure limit as well as prudential inter-bank counterparty exposure limit; and (ii) not paid interest on matured term deposits from the date of maturity till the date of their repayment at the applicable rate. 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.
3 The Reserve Bank of India (RBI) has, by an order dated December 13, 2023, imposed a monetary penalty of Rs.50,000/- (Rupees Fifty Thousand only) on The Limdi Urban Co-operative Bank Limited, Limdi, dist. Dahod, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’. 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 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 not paid interest on matured term deposits from the date of maturity till the date of their repayment at the applicable rate. 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 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.
4 The Reserve Bank of India (RBI) has, by an order dated December 07, 2023, imposed a monetary penalty of Rs.5.00 lakh (Rupees Five lakh only) on The Sankheda Nagarik Sahakari Bank Limited, Sankheda, Dist. Chhotaudepur, Gujarat (the bank) for non-compliance with directions issued by RBI on ‘Loans and advances to directors, relatives and firms/concerns in which they are interested’ read with RBI directions on ‘Loans and Advances to directors etc. - directors as surety/guarantors – Clarification’ and ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (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 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) sanctioned loans where relatives of directors of the bank stood as guarantors; and (ii) breached the prescribed inter-bank gross exposure limit as well as the prudential 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.
5 The Reserve Bank of India (RBI) has, by an order dated December 08, 2023, imposed a monetary penalty of Rs.1.50 lakh (Rupees One lakh Fifty thousand only) on The Bhuj Commercial Co-operative Bank Limited, Dist. Kachchh, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Know Your Customer (KYC) Direction, 2016’ and ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’. 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 Inspection Report, Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) not categorized its customers as low, medium or high risk category; and (ii) accepted interest-free deposits accounts other than current account. 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.
