These actions on 5 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, March 26, 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 co-operative banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on March 26, 2024.
RBI has imposed monetary penalty on Chikkamagaluru District Cooperative Central Bank,Karnataka; Dindigul Urban Co-operative Bank, Tamil Nadu; Janalaxmi Co-operative Bank Limited, Nashik; Solapur Janata Sahakari Bank and Mathura Jilla Sahkari Bank.
1 The Reserve Bank of India (RBI) has, by an order dated February 28, 2024, imposed a monetary penalty of Rs50,000/- (Rupees Fifty thousand only) on Chikkamagaluru District Cooperative Central Bank Ltd., Chikkamagaluru, Karnataka (the bank) for non-compliance with the directions issued by National Bank for Agriculture and Rural Development (NABARD) on ‘Frauds - Guidelines for Classification, Reporting and Monitoring’. 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 NABARD with reference to its financial position as on March 31, 2023. Based on supervisory findings of non-compliance with NABARD 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 and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of delay in reporting of frauds to NABARD 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.
2 The Reserve Bank of India (RBI) has, by an order dated February 28, 2024, imposed a monetary penalty of Rs25,000/- (Rupees Twenty-Five thousand only) on The Dindigul Urban Co-operative Bank Ltd., Dindigul, Tamil Nadu (the bank) for non-compliance with certain provisions of RBI directions on ‘Exposure Norms and Statutory/ Other Restrictions – UCBs’. 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 and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of sanction of loans to nominal members in excess of the prescribed ceiling 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.
3 The Reserve Bank of India (RBI) has, by an order dated March 12, 2024, imposed a monetary penalty of Rs59.90 lakh (Rupees Fifty-nine lakh and Ninety thousand only) on The Janalaxmi Co-operative Bank Limited, Nashik (the bank) for non-compliance with certain directions issued by RBI on ‘Constitution of Board of Management (BoM) in Primary (Urban) Co-operative Banks (UCBs)’, ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ and specific order issued by RBI under ‘Supervisory Action Framework for Primary (Urban) Co-operative Banks (UCBs)’. 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 for Supervisory Evaluation of the bank was conducted by RBI with reference to its financial position as on March 31, 2021 (ISE 2021). Based on supervisory findings of non-compliance with RBI directions/order 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 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 following charges against the bank were sustained, warranting imposition of monetary penalty. The bank had (i) failed to constitute a Board of Management within the extended timeline granted by RBI; (ii) sanctioned credit facilities to its nominal members in excess of the prescribed limit; and (iii) opened/renewed term deposits at interest rates, higher than those offered by the State Bank of India for the same tenor.
The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its customers. Further, imposition of 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 13, 2024, imposed a monetary penalty of Rs28.30 lakh (Rupees Twenty-Eight lakh and Thirty Thousand only) on Solapur Janata Sahakari Bank Limited, Solapur (the bank), for non-compliance with certain provisions of RBI directions on ‘Constitution of Board of Management in Primary (Urban) Co-operative Banks’ and prohibitory order/direction issued under Supervisory Action Framework (SAF). 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, inter alia, of non-compliance with RBI directions/prohibitory order 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 following charges against the bank were sustained and warranted imposition of monetary penalty:
(i) the bank had appointed a member on its Board of Management (BoM), who did not satisfy the ‘Fit and Proper’ criteria and it did not reconstitute the BoM within the specified time despite specific direction issued by RBI.
(ii) the bank contravened the prohibitory order/direction issued under SAF, when it sanctioned fresh loans carrying risk weights of more than 100%, during FY 2021-22.
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.
5 RBI imposes monetary penalty on Mathura Jilla Sahkari Bank Ltd, Uttar Pradesh
The Reserve Bank of India (RBI) has imposed, by an order dated February 23, 2024, a monetary penalty of Rs1.00 lakh (Rupees One lakh only) on Mathura Jilla Sahkari Bank Ltd, Uttar Pradesh (the bank) for non-compliance with provisions of Section 9 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 47A(1)(c) read with sections 46(4)(i) and 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, 2021. Based on supervisory findings of non-compliance with statutory provisions 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 provisions of BR Act.
After considering the bank’s reply to the notice and oral submissions made by it during the personal hearing, RBI found, inter alia, that the charge of not disposing an immovable property, which was not being used for its own purposes, within the maximum period stipulated under the BR Act 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.
