These actions on 6 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, April 18, 2024: The Reserve Bank of India (RBI) has, by separate orders in March 2024 and April 2024, imposed a monetary penalty on each of the six co-operative banks. These actions on the concerned 6 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on April 18, 2024 and on April 16, 2024.
RBI has imposed monetary penalty on Kangra Co-operative Bank Ltd., New Delhi; District Co-operative Bank Limited, Dehradun, Uttarakhand; Rajdhani Nagar Sahkari Bank Limited, Lucknow; Zila Sahakari Bank Ltd., Garhwal, Kotdwar, Uttarakhand; Rajkot Nagarik Sahakari Bank and Omkar Nagreeya Sahkari Bank Ltd., Kanpur.
1 The Reserve Bank of India (RBI) has, by an order dated April 10, 2024, imposed a monetary penalty of Rs5.00 lakh (Rupees Five Lakh only) on The Kangra Co-operative Bank Ltd., New Delhi (the bank) for non-compliance with the directions issued by RBI on ‘Basic Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs), and ‘Comprehensive Cyber Security Framework for Primary (Urban) Cooperative Banks (UCBs) - A Graded Approach’. 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 IT examination and scrutiny of the bank was conducted by RBI and complemented by findings of CSIRT-Fin/CERT-In and CERT-In empanelled auditor with reference to a Cyber Security Incident reported by the bank. Based on the 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 charge of not putting in place certain mandated controls under cyber security framework for UCBs 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 imposed, by an order dated March 31, 2024, a monetary penalty of Rs2.00 lakh (Rupees Two lakh only) on District Co-operative Bank Limited, Dehradun, Uttarakhand (the bank) for contravention of the provisions of section 20 (1)(b) 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, 2023. 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 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 renewing and thereby granting a secured loan to its directors/firm in which they were interested 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 imposed, by an order dated March 30, 2024, a monetary penalty of Rs5.00 lakh (Rupees Five lakh only) on Rajdhani Nagar Sahkari Bank Limited, Lucknow (the bank) for non-compliance with directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – 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 made by it, RBI found, inter alia, that the charge of not classifying certain loan accounts as non-performing in accordance with the IRAC norms 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 imposed, by an order dated March 30, 2024, a monetary penalty of Rs5.00 lakh (Rupees Five lakh only) on Zila Sahakari Bank Ltd., Garhwal, Kotdwar, Uttarakhand (the bank) for contravention of the provisions of section 20(1)(b) and section 26A(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, 2023. Based on supervisory findings of non-compliance with statutory provisions/ 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 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 following charges against the bank were sustained, warranting imposition of monetary penalty. The bank had (i) not transferred eligible unclaimed amounts to the Depositor Education and Awareness Fund within the prescribed time limit, and (ii) sanctioned a loan to its director, when it was prohibited.
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 April 16, 2024, imposed a monetary penalty of Rs43.30 lakh (Rupees Forty Three Lakh and Thirty Thousand only) on Rajkot Nagarik Sahakari Bank Ltd., Rajkot (the bank), for non-compliance with RBI directions on ‘Ban on loans and advances to directors and their relatives, and firms / concerns in which they are interested’, ‘Prohibition on opening of saving bank accounts in the names of certain bodies / organizations’ and ‘Maintenance of deposit accounts’. 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 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. The bank had (i) granted certain loans to firms/concerns in which the directors of the bank were interested as director/trustee, (ii) opened savings deposit accounts of certain ineligible entities, and (iii) levied penal charges for non-maintenance of minimum balance in certain inoperative accounts.
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.
6 The Reserve Bank of India (RBI) has imposed, by an order dated March 30, 2024, a monetary penalty of Rs3.00 lakh (Rupees Three lakh only) on Omkar Nagreeya Sahkari Bank Ltd., Kanpur (the bank) for non-compliance with direction issued under ‘Supervisory Action Framework (SAF) 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 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 offering higher interest rates, on term and savings deposits, than those offered by State Bank of India in contravention of specific instructions issued under SAF 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.
