This action is based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, 20 October, 2023: The Reserve Bank of India (RBI) has imposed a monetary penalty on 5 Cooperative banks, as per the info, released by the RBI on October 19, 2023. These include Vadnagar Nagarik Sahakari Bank, Gujarat; People’s Co-operative Bank, Dholka, Gujarat; Chhapi Nagarik Sahakari Bank, Banaskantha, Gujarat; Mahila Co-operative Nagrik Bank, Bharuch, Gujarat and Surat National Co-operative Bank, Gujarat.
1 The Reserve Bank of India (RBI) has imposed, by an order dated September 18, 2023, a monetary penalty of ?2.00 lakh (Rupees Two lakh only) on Vadnagar Nagarik Sahakari Bank Ltd., Vadnagar, Gujarat (the bank) for contravention of directions issued by RBI on ‘Loans and Advances to directors, relatives and firms/concerns in which they are interested’ read with ‘Loans and Advances to Directors etc. - Directors as surety/guarantors – Clarification’, and ‘Co-operative Banks - Interest Rate on Deposits. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47 A (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 (i) sanctioned a loan where relative of one of the directors of the bank, stood as guarantor, and (ii) not paid interest on matured term deposits from the date of maturity till the date of their repayment at the applicable rate. 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 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 RBI has imposed, by an order dated September 18, 2023, a monetary penalty of ?3.00 lakh (Rupees Three lakh only) on People’s Co-operative Bank Ltd., Dholka, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Loans and advances to directors, relatives and firms/concerns in which they are interested’ and ‘Co-operative Banks - Interest Rate on Deposits’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47 A (1) (c) read with Section 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 (i) sanctioned a loan to a relative of one of its directors, and (ii) not paid interest on overdue term deposits from the date of maturity till the date of repayment at the applicable rate. 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 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.
3 The RBI has, by an order dated September 18, 2023, imposed a monetary penalty of ?1.00 lakh (Rupees One lakh only) on The Chhapi Nagarik Sahakari Bank Ltd., Banaskantha, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Loans and advances to directors, relatives and firms /concerns in which they are interested’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47 A (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 sanctioned loan to a relative of one of its directors. 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 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 aforesaid charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank.
4 RBI has imposed, by an order dated September 18, 2023, a monetary penalty of ?2.00 lakh (Rupees Two lakh only) on Mahila Co-operative Nagrik Bank Ltd., Bharuch, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47 A (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, examination of the Inspection Report, Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) breached inter-bank gross and counterparty exposure limits, and (ii) not carried out review of risk categorization of accounts as per prescribed periodicity. 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 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.
5 The Reserve Bank of India (RBI) has, by an order dated September 18, 2023, imposed a monetary penalty of ?6.00 lakh (Rupees Six lakh only) on Surat National Co-operative Bank Ltd., Surat, Gujarat (the bank) for contravention of directions issued by RBI on ‘Co-operative Banks - Interest Rate on Deposits’ and ‘Customer Protection - Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47 A (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 (i) not paid interest on matured term deposits from the date of maturity till the date of their repayment at the applicable rate and (ii) not provided the facility to customers to respond by ‘Reply’ to the electronic banking transactions related SMSs and email alerts sent by the bank, for instantly reporting unauthorised 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 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.
