These actions on 4 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, February 24, 2024:The Reserve Bank of India (RBI) has, by separate orders in February 14, 2024, imposed a monetary penalty on 4 co-operative banks. These actions on 4 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on February 22, 2024.
RBI has imposed monetary penalty on Hanamasagar Urban Co-operative Bank Ltd., Karnataka; Transport Co-operative Bank Ltd., Indore, Madhya Pradesh; Janseva Co-operative Bank Limited, Nashik, Maharashtra and G P Parsik Sahakari Bank Ltd., Thane, Maharashtra.
1 The Reserve Bank of India (RBI) has, by an order dated February 14, 2024, imposed a monetary penalty of ₹50,000/- (Rupees Fifty thousand only) on Hanamasagar Urban Co-operative Bank Ltd., Hanamasagar, Karnataka (the bank) for non-compliance with the directions issued by RBI on “Frauds in UCBs: Changes in Monitoring and Reporting mechanism” read with the directions issued by RBI on “Master Circular on Frauds-Classification and Reporting” and “Reporting of Frauds on XBRL-FMR submission, FMR 2 discontinuation and introduction of FMR-3”. 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 not reported a case of fraud to RBI within the stipulated timeline. 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 RBI 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 directions issued by RBI was substantiated and warranted imposition of monetary penalty on the bank.
2 The Reserve Bank of India (RBl) has, by an order dated February 14, 2024, imposed a monetary penalty of ₹1.00 lakh (Rupees One lakh only) on Transport Co-operative Bank Ltd., Indore, Madhya Pradesh (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 on ‘Investments by Primary (Urban) Co-operative Banks’. This penalty has been imposed in exercise of powers vested in 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 Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) sanctioned director related loans and a loan where relative of the director of the bank stood as guarantor, and (ii) breached prudential inter-bank (gross) 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 non-compliance with RBI directions, as stated therein.
After considering the bank's reply to the notice, oral submissions made by it during personal hearing and additional submissions made thereafter, 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 Reserve Bank of India (RBl) has, by an order dated February 13, 2024, imposed a monetary penalty of ₹50,000/- (Rupees Fifty thousand only) on Janseva Co-operative Bank Limited, Nashik, Maharashtra (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’. This penalty has been imposed in exercise of powers vested in 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 Risk Assessment Report and all correspondence related thereto revealed, inter alia, that the bank had (i) sanctioned a director related loan and (ii) sanctioned a loan where relative of the director of the bank stood as guarantor. 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 RBI directions, as stated therein.
After considering the bank's reply to the notice, oral submissions made by it during personal hearing and additional submissions made thereafter, RBI came to the conclusion that the aforesaid charge of non-compliance with the RBI directions was substantiated and warranted imposition of monetary penalty.
4 The Reserve Bank of India (RBI) has, by an order dated February 7, 2024, imposed a monetary penalty of ₹26.60 lakh (Rupees Twenty-Six lakh Sixty thousand only) on G P Parsik Sahakari Bank Ltd., Thane (the bank) for non-compliance with the directions issued by RBI on ‘Customer Protection - Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions’ and on ‘Basic Savings Bank Deposit Account’ (BSBD Account). This penalty has been imposed in exercise of powers conferred on RBI under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
This action is based on deficiency 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 Risk Assessment Report, Inspection Report and all correspondence related thereto revealed, inter alia, that the bank had (i) not credited (shadow reversal) the amounts involved in certain unauthorised electronic transactions into the accounts of customers within 10 working days from the dates of notification by the customers and (ii) levied ATM card issuance charges and ATM card annual maintenance charges in BSBD Accounts. 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 RBI directions, as stated therein.
After considering the bank’s reply to the notice, the additional submissions made by it and oral submissions made 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.
