These actions on 4 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, July 01, 2024: The Reserve Bank of India (RBI) has, by separate orders in June 2024, imposed a monetary penalty on four Co-operative banks. These actions on the concerned 4 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on July 1, 2024.
RBI has imposed monetary penalty on Gujarat Rajya Karmachari Co-operative Bank Ltd., Ahmedabad; Rohika Central Co-operative Bank Limited, Madhubani, Bihar; National Co-operative Bank Ltd., Mumbai, Maharashtra and Bank Employees’ Co-operative Bank Ltd., West Bengal
1 The Reserve Bank of India (RBI) has, by an order dated June 25, 2024, imposed a monetary penalty of Rs7.50 lakh (Rupees Seven lakh Fifty thousand only) on The Gujarat Rajya Karmachari Co-operative Bank Ltd., Ahmedabad, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Financial Statements - Presentation and Disclosures’, ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’, ‘Co-operative Banks - Interest Rate on Deposits’ and contravention of the provisions of sub-section (2) of section 35 read with section 56 of the Banking Regulation Act, 1949 (BR Act). 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 as well as provisions of section 47A(1)(a) read with sections 46(2) and 56 of the BR Act.
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 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 directions and provisions of the BR Act. After considering the bank’s reply to the notice and oral submissions made by it during the personal hearing, RBI found, inter alia, that that the following charges against the bank were sustained, warranting imposition of monetary penalty. The bank had (i) not disclosed the penalty imposed by RBI in the ‘Notes to Accounts’ to the balance sheet in its Annual Report; (ii) not provided documents and complete information pertaining to the affairs of the bank, required by the RBI inspecting officer(s); (iii) breached prudential inter-bank (counterparty) exposure limit and (iv) not paid interest on matured term deposits from the date of maturity till the date of their repayment at the applicable rate.
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 June 26, 2024, imposed a monetary penalty of Rs1.50 lakh (Rupees One lakh and fifty thousand only) on The Rohika Central Co-operative Bank Limited, Madhubani, Bihar (the bank) for non-compliance with certain Directions issued by RBI on ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
The Statutory Inspection of the bank was conducted by National Bank for Agriculture and Rural Development (NABARD) with reference to the bank’s 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 direction. After considering the bank’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty. The bank had failed to (i) carry out risk categorisation of all customers, (ii) adopt a system of periodic review of risk categorization of accounts and (iii) carry out periodic updation of KYC documents.
This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered by the bank with its customers. Further, imposition of penalty is without prejudice to any other action that may be initiated by RBI against the bank.
3 The Reserve Bank of India (RBI) has, by an order dated June 27, 2024, imposed a monetary penalty of Rs2.00 lakh (Rupees Two lakh only) on The National Co-operative Bank Ltd., Mumbai, Maharashtra (the bank) for non-compliance with certain directions issued by RBI on ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers vested in RBI, conferred under 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 charge of allotting multiple UCICs to its customers was sustained, warranting imposition of monetary penalty.
This action is based on the 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.
4 The Reserve Bank of India (RBI) has, by an order dated June 26, 2024, imposed a monetary penalty of Rs1.00 lakh (Rupees One lakh only) on The Bank Employees’ Co-operative Bank Ltd., West Bengal (the bank) for non-compliance with the directions issued by RBI on ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers vested in RBI, conferred under 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 direction. After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the charge of not implementing a system of periodic review of risk categorisation of accounts sustained, warranting imposition of monetary penalty.
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.
