These actions on 5 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 5
coop banks. These actions on 5 coop banks are based on deficiencies in regulatory
compliance, as per the press releases issued by the RBI on 30 November 2023.
RBI has imposed monetary penalty on Patliputra Central Cooperative Bank, Bihar;
Balasore Bhadrak Central Co-operative Bank; Dhrangadhra People’s Co-operative
Bank., Dist. Surendranagar, Gujarat; Patan Nagarik Sahakari Bank Ltd., Patan,
Gujarat and Mandal Nagarik Sahakari Bank Ltd., Mandal, Dist. Ahmedabad, Gujarat.
1 The Reserve Bank of India (RBI) has, by an order dated November 13, 2023,
imposed a monetary penalty of ?1.50 lakh (Rupees One lakh and fifty thousand only)
on The Patliputra Central Cooperative Bank Ltd, Bihar (the bank) for non-compliance
with the directions issued by RBI on ‘The Depositor Education and Awareness Fund
Scheme, 2014 – Section 26A of Banking Regulation Act, 1949 - Operational
Guidelines’ and ‘Reserve Bank of India – (Know Your Customer (KYC)) Directions,
2016’. 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 the 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 (i) not transferred eligible
amounts to the Depositor Education and Awareness Fund, (ii) not classified its
customers into various risk categories (low, medium and high), and (iii) not put in
place a system of periodic updation of KYC. Consequently, a notice was issued to
the bank advising it to show cause as to why penalty should not be imposed on it for
non-compliance with the said directions, as stated therein.
After considering the bank’s reply to the notice and additional submissions, RBI
came to the conclusion that the aforementioned charge of non-compliance with the
RBI directions was substantiated and warranted imposition of monetary penalty on
the bank.
2 The Reserve Bank of India (RBI) has, by an order dated November 07, 2023,
imposed a monetary penalty of ?50,000/- (Rupees Fifty thousand only) on The
Balasore Bhadrak Central Co-operative Bank Ltd., Balasore (the bank) for non-
compliance with the directions issued by RBI on “Membership of Credit Information
Companies (CICs)”. This penalty has been imposed in exercise of powers conferred
on RBI under the provisions of section 25 (1) (iii) read with section 23 (4) of the
Credit Information Companies (Regulation) Act, 2005.
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 the 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 failed to upload credit
information to Credit Information Companies. Consequently, a notice was issued to
the bank advising it to show cause as to why penalty should not be imposed on it for
non-compliance with the aforementioned direction, as stated therein.
After considering the bank’s reply to the notice, additional submissions 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 direction was substantiated and
warranted imposition of monetary penalty on the bank.
3 The Reserve Bank of India (RBI) has, by an order dated November 03, 2023,
imposed a monetary penalty of ?1.00 lakh (Rupees One lakh only) on The
Dhrangadhra People’s Co-operative Bank Ltd., Dhrangadhra, Dist. Surendranagar,
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)’. 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 breached the 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.
4 The Reserve Bank of India (RBI) has, by an order dated October 30, 2023,
imposed a monetary penalty of ?1.50 lakh (Rupees One lakh fifty thousand only) on
Patan Nagarik Sahakari Bank Ltd., Patan, 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’ read with ‘Loans and Advances to
directors etc. - directors as surety/guarantors – Clarification’ and ‘Placement of
Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’. 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 a relative of one of the directors of the
bank stood as guarantor; and (ii) breached the prudential 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.
5 The Reserve Bank of India (RBI) has, by an order dated November 03, 2023,
imposed a monetary penalty of ?1.50 Lakh (Rupees One lakh fifty thousand only)
on The Mandal Nagarik Sahakari Bank Ltd., Mandal, Dist. Ahmedabad, 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’
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 loans where a relative of one of the director of the
bank stood as guarantor; and (ii) not paid interest at the applicable rate a) on term
deposits which matured on a Sunday / holiday / non-business working day, and
were paid on the succeeding working days, b) on deposits withdrawn before their
maturity for the period deposits remained with the bank and c) on matured overdue
term deposits from the date of maturity till the date of their repayment.
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.