These actions on 2 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, 11 November, 2024: The Reserve Bank of India (RBI) has, by separate orders in November 2024, imposed a monetary penalty on two co-operative banks. These actions on the concerned 2 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on November 11, 2024.
RBI has imposed monetary penalty on Sathamba People's Co-operative Bank Ltd., Aravalli, Gujarat and Bally Co-operative Bank Ltd., Howrah, West Bengal
1 The Reserve Bank of India (RBI) has, by an order dated November 05, 2024, imposed a monetary penalty of Rs50,000 (Rupees Fifty thousand only) on The Sathamba People's Co-operative Bank Ltd., Aravalli, Gujarat (the bank) for non-compliance with certain directions issued by RBI on ‘Know Your Customer (KYC)’. 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, 2023. 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 following charges against the bank were sustained, warranting imposition of monetary penalty.
The bank had failed to:
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 (RBl) has, by an order dated November 06, 2024, imposed a monetary penalty of Rs1.10 lakh (Rupees One Lakh Ten Thousand only) on Bally Co-operative Bank Ltd., Howrah, West Bengal (the bank), for non-compliance with certain directions issued by RBI on ‘Priority Sector Lending (PSL) - Targets and Classification’ and specific directions issued by RBI on making contribution to Micro and Small Enterprises (MSE) Refinance Fund due to shortfall in achievement of PSL. 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 bank was directed by RBI through specific directions, to deposit a certain amount to MSE Refinance Fund administered by Small Industries Development Bank of India (SIDBI) against the shortfall in achievement of PSL target for the Financial Year (FY) 2022-23. On failure to deposit the prescribed amount, a cautionary letter was also issued by RBI advising the bank to deposit the requisite amount, but the bank failed to deposit the same. Based on the above-mentioned non-compliance 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 specific 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 failure to deposit the prescribed amount to MSE Refinance Fund maintained with SIDBI against the shortfall in achievement of PSL target for FY 2022-23 within the prescribed time and even after the issuance of cautionary letter, 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.
