These actions on 2 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, August 28, 2024: The Reserve Bank of India (RBI) has, by separate orders dated August 22, 2024, imposed a monetary penalty on 2 co-operative banks. These actions on the said two coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on August 28, 2024.
RBI has imposed monetary penalty on Urban Co-operative Bank Ltd., Cuttack and Manipur State Co-operative Bank.
1 The Reserve Bank of India (RBI) has, by an order dated August 22, 2024, imposed a monetary penalty of Rs1.50 lakh (Rupees One Lakh Fifty Thousand only) on The Urban Co-operative Bank Ltd., Cuttack (the bank) for non-compliance with certain directions issued by RBI on ‘Know Your Customer (KYC) norms’ and ‘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, 2023. 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) failed to review risk categorisation of its customers as per the prescribed periodicity, ii) failed to update KYC of its customers as per prescribed periodicity and iii) breached the interbank (counterparty) exposure limit.
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 August 22, 2024, imposed a monetary penalty of Rs2.00 lakh (Rupees Two Lakh only) on The Manipur State Co-operative Bank Ltd., Manipur (the bank) for contravention of provisions of Section 9 of Banking Regulation Act,1949 (BR Act) and non-compliance with the of provisions of Credit Information Companies (Regulation) Act, 2005. 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, 1949 and Section 25 of the Credit Information Companies (Regulation) Act, 2005.
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 provision / 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 statutory provisions. 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) failed to dispose certain Non-Banking Assets (NBAs) within the prescribed period and ii) failed to report credit information of customers to four Credit Information Companies (CICs).
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.
