These actions on 5 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, March 22, 2024: The Reserve Bank of India (RBI) has, by separate orders in February 2024 and March 2024, imposed a monetary penalty on 5 Co-operative banks. These actions on these 5 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on March 21, 2024.
RBI has imposed monetary penalty on Pragati Mahila Nagrik Sahakari Bank Maryadit, Bhilai, Chhattisgarh; Janata Co-operative Bank Limited, Malegaon, Nashik, Maharashtra; Jila Sahakari Kendriya Bank Maryadit, Sehore, Madhya Pradesh; Karad Urban Co-operative Bank, Maharashtra and Kalupur Commercial Co-operative Bank Ltd., Ahmedabad.
1 The Reserve Bank of India (RBl) has, by an order dated February 2024 and March 2024,, imposed a monetary penalty of ₹1.00 lakh (Rupees One lakh only) on Pragati Mahila Nagrik Sahakari Bank Maryadit, Bhilai, Chhattisgarh (the bank) for non-compliance with RBI directions on ‘Exposure Norms and Statutory/Other Restrictions-UCBs’ and ‘Know Your Customer (KYC) Directions, 2016. This penalty has been imposed in exercise of powers vested in RBI, conferred under provisions of section 47A (1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank's reply to the notice, the additional submissions and oral submissions made by it during the personal hearing, RBI found, inter alia, that the following charges were sustained warranting imposition of monetary penalty, to the extent of non-compliance. The bank had (i) breached prudential inter-bank (gross) exposure limit, and (ii) not undertaken periodic review of risk categorization of its customers once in six months.
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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
2 The Reserve Bank of India (RBI) has, by an order dated February 27, 2024 imposed a monetary penalty of ₹5.00 lakh (Rupees Five lakh only) on Janata Co-operative Bank Limited, Malegaon, Nashik, Maharashtra (the bank) for non-compliance with RBI directions on ‘Management of Advances-UCBs’ and ‘Exposure Norms and Statutory/Other Restrictions-UCBs’. This penalty has been imposed in exercise of powers vested in RBI, conferred under provisions of section 47 A (1) (c) read with section 46 (4) (i) and section 56 of the Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank’s reply to the notice, oral submissions made by it during personal hearing and additional submission made thereafter, RBI found, inter alia, that the following charges were sustained, warranting imposition of monetary penalty. The bank had (i) sanctioned gold loans beyond prescribed regulatory limit under bullet repayment scheme, and (ii) sanctioned loans to its nominal members beyond prescribed regulatory limit.
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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
3 The Reserve Bank of India (RBl) has, by an order dated February 27, 2024, imposed a monetary penalty of ₹75,000/- (Rupees Seventy-Five thousand only) on Jila Sahakari Kendriya Bank Maryadit, Sehore, Madhya Pradesh (the bank) for non-compliance with the provisions of section 27 read with section 56 of the Banking Regulation Act, 1949 (BR Act). This penalty has been imposed in exercise of powers vested in RBI, conferred under the provisions of section 47 A (1) (c) read with section 46 (4) (i) and section 56 of the BR Act.
The statutory inspection of the bank was conducted by National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with statutory provision/ directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for contravention of statutory provisions and directions.
After considering the bank's reply to the notice, the additional submissions and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of delay in submission of statutory and Off-site surveillance system (OSS) returns to RBI and NABARD respectively was sustained, warranting imposition of monetary penalty.
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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
4 The Reserve Bank of India (RBI) has, by an order dated March 01, 2024, imposed a monetary penalty of ₹13.30 lakh (Rupees Thirteen Lakh and Thirty Thousand only) on Karad Urban Co-operative Bank Ltd. Karad (the bank), for non-compliance with certain directions issued by RBI on ‘Interest Rate on Deposits’. This penalty has been imposed in exercise of powers vested in RBI, conferred under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the charge pertaining to opening of savings deposit accounts in the name of certain ineligible entities was sustained, warranting imposition of monetary penalty.
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. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
5 The Reserve Bank of India (RBI) has, by an order dated March 04, 2024, imposed a monetary penalty of ₹26.60 lakh (Rupees Twenty Six lakh Sixty thousand only) on The Kalupur Commercial Co-operative Bank Ltd., Ahmedabad (the bank), for contravention of the provisions of section 26 A (2) read with section 56 of the Banking Regulation Act, 1949 (BR Act) and for non-compliance with RBI directions 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 vested in RBI, conferred under provisions of section 47A(1)(c) read with sections 46(4)(i) and 56 of the BR Act.
The statutory inspection of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with statutory provision/RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the instructions.
After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty to the extent of non-compliance. The bank had (i) not transferred eligible amounts to the Depositor Education and Awareness Fund within the prescribed period and (ii) renewed two advances to a company in which the relative of a director of the bank was interested, being a major shareholder in the company.
This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction of agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
