These actions on 5 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, January 9, 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 8, 2024.
RBI has imposed monetary penalty on Subramanianagar Co-operative Urban Bank Ltd., Salem, Tamil Nadu; Stambhadri Co-operative Urban Bank Ltd., Khammam, Telangana; Halol Urban Co-operative Bank Ltd., Panchmahal, Gujarat; Mehsana Jilla Panchayat Karmachari Co-operative Bank Ltd., Mehsana, Gujarat; and Navsarjan Industrial Co-operative Bank Ltd., Ankleshwar, dist. Bharuch, Gujarat.
1 The Reserve Bank of India (RBI) has, by an order dated December 19, 2023, imposed a monetary penalty of Rs.25,000/- (Rupees Twenty Five thousand only) on The Subramanianagar Co-operative Urban Bank Ltd., Salem, Tamil Nadu (the bank) for non-compliance with the directions issued by RBI on ‘Board of Directors - UCBs’ read with the directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms/concerns in which they are interested’. 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 (AACS).
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 extended loans to a relative of a director. 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 aforesaid 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 directions issued by RBI was substantiated and warranted imposition of monetary penalty on the bank.
2 The Reserve Bank of India (RBI) has, by an order dated December 19, 2023, imposed a monetary penalty of Rs.50,000/- (Rupees Fifty thousand only) on The Stambhadri Co-operative Urban Bank Ltd., Khammam, Telangana (the bank) for non-compliance with the directions issued by RBI on ‘Board of Directors - UCBs’ read with the directions issued by RBI on ‘Loans and advances to directors, their relatives, and firms/concerns in which they are interested’. 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 extended loans to a director and directors’ relatives. 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 aforesaid 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 14, 2023, imposed a monetary penalty of Rs.2.00 lakh (Rupees Two lakh only) on The Halol Urban Co-operative Bank Ltd., Panchmahal, 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’, ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘(Co-operative Banks - Interest Rate on Deposits) Directions, 2016’. 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) sanctioned a loan where relative of one of the directors of the bank stood as guarantor, (ii) breached prudential inter-bank counterparty exposure limit and (iii) not paid interest in 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.
4 The Reserve Bank of India (RBI) has, by an order dated December 13, 2023, imposed a monetary penalty of Rs.3.00 lakh (Rupees Three lakh only) on The Mehsana Jilla Panchayat Karmachari Co-operative Bank Ltd., Mehsana, 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 contravention of provisions of Section 26A(2) read with Section 56 of the Banking Regulation Act, 1949 (BR Act). 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 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) breached the prudential inter-bank counterparty exposure limit, and (ii) not transferred eligible amount to the Depositor Education and Awareness Fund. 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 and provisions of the BR Act, 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 and provisions of the BR Act was substantiated and warranted imposition of monetary penalty on the bank.
5 The Reserve Bank of India (RBI) has, by an order dated December 14, 2023 imposed a monetary penalty of Rs.7.00 lakh (Rupees Seven lakh only) on Navsarjan Industrial Co-operative Bank Ltd., Ankleshwar, dist. Bharuch, 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)’, ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’ and contravention of ‘Section 26A (2) read with Section 56 of the Banking Regulation Act, 1949 (BR Act)’. 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 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) breached inter-bank gross and counterparty exposure limits, (ii) not carried out review of risk categorization of accounts as per prescribed periodicity, and (iii) not transferred eligible amount to Depositor Education and Awareness Fund. 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 and provisions of the BR Act, 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 and provisions of the BR Act was substantiated and warranted imposition of monetary penalty on the bank.
