These actions on 4 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, November 30, 2023: The Reserve Bank of India (RBI) has, by separate orders in November and October, 2023, imposed a monetary penalty on each of 4 coop banks. These actions on 4 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on December 4, 2023.
RBI has imposed monetary penalty on Jijamata Mahila Sahakari Bank Limited, Pune; Shri Laxmikrupa Urban Co-operative Bank Limited, Pune; Konark Urban Cooperative Bank Ltd., Ulhasnagar and Chembur Nagarik Sahakari Bank Ltd., Mumbai.
1 The Reserve Bank of India (RBI) has, by an order dated November 20, 2023, imposed a monetary penalty of Rs.4.00 lakh (Rupees Four lakh only) on Jijamata Mahila Sahakari Bank Limited, Pune (the bank) for non-compliance with RBI directions on ‘Reserve Bank of India - Know Your Customer (KYC) Direction, 2016’ and ‘Frauds in UCBs: Changes in Monitoring and Reporting Mechanism’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A (1) (c) read with Section 46 (4) (i) and Section 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 Inspection report, Risk Assessment Report and all correspondence thereto revealed, inter alia, that the bank had (i) not conducted periodic review of risk categorisation of accounts; and (ii) not reported a fraud to RBI within the stipulated timeline. Subsequently, 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, as stated therein.
After considering the bank’s reply to the notice, oral submission made by the bank during personal hearing, and additional submission made by it, RBI came to the conclusion that the charge of non-compliance with the aforesaid directions issued by RBI was substantiated and warranted imposition of monetary penalty on the bank.
2 The Reserve Bank of India (RBI), by an order dated November 20, 2023, has imposed a monetary penalty of Rs.1.00 lakh (Rupees One lakh only) on Shri Laxmikrupa Urban Co-operative Bank Limited, Pune (the bank) for non-compliance with RBI directions on ‘Reserve Bank of India - 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 Section 46(4)(i) and Section 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 Inspection report, Risk Assessment Report and all correspondence thereto revealed, inter alia, that the bank had not conducted periodic review of risk categorisation of its customers. Consequently, 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 as stated therein.
After considering the bank’s reply to the notice, oral submission made during personal hearing and additional submissions made by it, RBI came to the conclusion that the charge of non-compliance with the aforesaid directions issued by RBI was substantiated and warranted imposition of monetary penalty on the bank.
3 The Reserve Bank of India (RBI) has, by an order dated November 20, 2023, imposed a monetary penalty of Rs.1.00 lakh (Rupees One lakh only) on The Konark Urban Cooperative Bank Ltd., Ulhasnagar (the bank) for non-compliance with the directions issued by RBI on ‘Maintenance of Deposit Accounts - Primary (Urban) Co-operative Banks’. 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 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 Inspection Report, Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had imposed fixed penal charges for shortfall in maintenance of minimum balance in savings bank accounts instead of imposing penal charges proportionate to the extent of shortfall. 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, 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 (RBI) has, by an order dated November 20, 2023, imposed a monetary penalty of Rs.1.00 lakh (Rupees One lakh only) on The Chembur Nagarik Sahakari Bank Ltd., Mumbai (the bank) for non-compliance with the directions issued by RBI on ‘Maintenance of Deposit Accounts - Primary (Urban) Co-operative Banks’. 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 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 Inspection Report, Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had imposed fixed penal charges for shortfall in maintenance of minimum balance in savings bank accounts, instead of imposing penal charges proportionate to the extent of shortfall and had also failed to notify its customers that in the event of the minimum balance not being restored in the account within a month from the date of notice, penal charges will be applicable. 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, 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.
