These actions on 4 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, January 29, 2024: The Reserve Bank of India (RBI) has, by separate orders in January 2024, imposed a monetary penalty on 5 different Co-operative banks. These actions on the 5 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on January 29, 2024.
RBI has imposed monetary penalty on Mula Sahakari Bank, Dr. Panjabrao Deshmukh Urban Co-operative Bank, Bhilai Nagrik Sahakari Bank, Krushiseva Urban Co-operative Bank and Jila Sahakari Kendriya Bank Maryadit, Shahdol.
1 The Reserve Bank of India (RBl) has, by an order dated January 08, 2024, imposed a monetary penalty of Rs50,000/- (Rupees Fifty thousand only) on Mula Sahakari Bank Ltd., Sonai, Dist. Ahmednagar (Maharashtra) (the bank) for non-compliance with the directions issued by RBI on ‘Exposure Norms and Statutory/Other Restrictions - UCBs’. 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 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 Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had breached 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.
2 The Reserve Bank of India (RBl) has, by an order dated January 08, 2024, imposed a monetary penalty of Rs5.00 lakh (Rupees Five lakh only) on Dr. Panjabrao Deshmukh Urban Co-operative Bank Limited, Amravati, Maharashtra (the bank) for contravention of specific directions issued by RBI under Supervisory Action Framework (SAF), and non-compliance with the RBI Directions on ‘Management of Advances-UCBs’ and ‘Know Your Customer (KYC) 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 Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) sanctioned fresh loans and advances carrying risk weight of more than 100% in violation of specific directions issued under SAF, (ii) sanctioned gold loans under the Bullet Repayment Scheme beyond the regulatory limit, (iii) not conducted periodic updation of KYC as per risk categorization of customers, (iv) not conducted periodic review of risk categorization of accounts; and (v) not put in place a robust software to throw alerts as part of effective identification and reporting of suspicious transactions. 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 and additional submissions made thereafter, 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 January 08, 2024, imposed a monetary penalty of Rs50,000/- (Rupees Fifty thousand only) on Bhilai Nagrik Sahakari Bank Maryadit, Bhilai, Chhattisgarh (the bank) for non-compliance with the directions issued by RBI on ‘Know Your Customer (KYC) Direction, 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 the 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 revealed, inter alia, that the bank had failed to carry out periodic updation of KYC for its customers at the prescribed periodic intervals. 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 additional submissions made by it, 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 (RBl) has, by an order dated January 08, 2024, imposed a monetary penalty of Rs50,000/- (Rupees Fifty thousand only) on Krushiseva Urban Co-operative Bank Limited, Kole, Solapur, Maharashtra (the bank) for non-compliance with the directions issued by RBI on ‘Loans and advances to directors, their relatives and firms/concerns in which they are interested’ read with RBI directions on ‘Board of Directors - UCBs’ and ‘Exposure Norms and Statutory/Other Restrictions – UCBs’ and for contravention of specific directions issued by RBI under the Supervisory Action Framework (SAF). 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 Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) sanctioned loans to directors and their relatives; and (ii) incurred capital expenditure without prior approval of RBI in violation of specific directions issued under SAF. 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 personal hearing and additional submissions made thereafter, 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 (RBl) has, by an order dated January 08, 2024, imposed a monetary penalty of Rs75,000/- (Rupees Seventy five thousand only) on Jila Sahakari Kendriya Bank Maryadit, Shahdol, Madhya Pradesh (the bank) for contravention of the provisions of section 26A read with section 56 of the Banking Regulation Act, 1949 (BR Act) read with the ‘Depositor Education and Awareness Fund Scheme, 2014’ (the Scheme). 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 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 National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2022, and examination of the Inspection Report and all correspondence related thereto revealed, inter alia, that the bank had not transferred the 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 statutory provisions and 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 statutory provisions and directions related to the scheme was substantiated and warranted imposition of monetary penalty on the bank.
