These actions on 5 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, April 4, 2024: The Reserve Bank of India (RBI) has, by separate orders in February, 2024 and March 28, 2024 imposed a monetary penalty on each of 5 Co-operative banks. These actions on the five coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on 4th April, 2024.
RBI has imposed monetary penalty on Bassein Catholic Co-operative Bank, Maharashtra; Tirumangalam Co-operative Urban Bank, Tamil Nadu; Tirupattur Urban Co-operative Bank, Tamil Nadu; Nagpur Nagarik Sahakari Bank, Maharashtra and Himachal Pradesh State Co-operative Bank, Shimla.
1 The Reserve Bank of India (RBI) has, by an order dated March 28, 2024, imposed a monetary penalty of Rs61,60,000/- (Rupees Sixty-One Lakh and Sixty Thousand only) on Bassein Catholic Co-operative Bank Ltd. (the bank) for non-compliance with RBI directions on ‘Frauds in UCBs: Changes in Monitoring and Reporting mechanism’, ‘Know Your Customer (KYC)’, ‘Maintenance of Deposit Accounts’ and ‘Management of Advances’. This penalty has been imposed in exercise of powers vested in RBI, conferred under the provisions of section 47A(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 during the personal hearing and additional submissions made by it, RBI found, inter alia, that the following charges were sustained, warranting imposition of monetary penalty:
The bank had: (i) reported frauds with delay, (ii) not carried out periodic review of risk categorisation of accounts during FY 2021-22, (iii) levied penal charges for non-maintenance of minimum balances in dormant / inoperative savings bank and current deposit accounts, and (iv) restructured credit facilities without establishing the financial viability and reasonable certainty of repayment by the borrowers.
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 Tirumangalam Co-operative Urban Bank Ltd., Tirumangalam, Tamil Nadu (the bank) for non-compliance with RBI directions on ‘Board of Directors - UCBs’ read with ‘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 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 extending loans to its directors and their relative 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 February 28, 2024, imposed a monetary penalty of Rs25,000/- (Rupees Twenty-Five thousand only) on The Tirupattur Urban Co-operative Bank Ltd., Tirupattur, 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 sanctioning 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 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 27, 2024, imposed a monetary penalty of Rs28.30 lakh (Rupees Twenty-Eight Lakh Thirty Thousand only) on Nagpur Nagarik Sahakari Bank Ltd., Nagpur (the bank), for non-compliance with RBI directions on ‘Interest Rate on Deposits’ and ‘Know Your Customer (KYC)’. 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, 2021 and 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 during the personal hearing, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty.:
(i) the bank had not paid interest on : (a) original principal deposit amounts, for the Sundays/ holidays/ non-business working days on which certain term deposits had matured, while making payment of the proceeds of those deposits on the succeeding working day (b) balances lying in certain current accounts of deceased individual depositors/sole proprietorship concerns, from the date of their death till the date of repayment of such balances to their claimants (c) certain matured term deposits, at the rate applicable to savings deposits, for the period they remained unclaimed after maturity, while making repayment of such deposits and
(ii) the bank did not undertake periodic review of risk categorization of accounts of its customers, at least 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 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 The Reserve Bank of India (RBI) has, by an order dated March 27, 2024, imposed a monetary penalty of Rs5.00 lakh (Rupees Five lakh only) on The Himachal Pradesh State Co-operative Bank Limited, Shimla (the bank) for contravention of the provisions of section 26 A (2) 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, 2022. 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 its failure to comply with the said provisions of the 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 transferring the eligible amounts to the Depositor Education and Awareness Fund within prescribed period 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.
