These actions on 5 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, August 23, 2024: The Reserve Bank of India (RBI) has, by separate orders in July 2024 and August, 2024, imposed a monetary penalty on five co-operative banks. These actions on the concerned 5 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on 22 August, 2024, 2024.
RBI has imposed monetary penalty on Gandhidham Mercantile Co-operative Bank, Kachchh, Gujarat; Co-operative Bank of Rajkot Ltd., Rajkot, Gujarat; Shikshak Sahakari Bank, Nagpur; Nashik Jilha Mahila Sahakari Bank Ltd, Nashik, Maharashtra and Maharashtra Nagari Sahakari Bank Limited, Latur.
1 The Reserve Bank of India (RBI) has, by an order dated August 09, 2024, imposed a monetary penalty of Rs1 lakh (Rupees One lakh only) on The Gandhidham Mercantile Co-operative Bank Limited, Kachchh, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Donations to Trusts and Institutions where Directors, their relatives hold position or are interested’. 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.
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, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the charge of donating to a trust where directors/ relatives of the directors of the bank were interested was 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.
2 The Reserve Bank of India (RBI) has, by an order dated August 09, 2024, imposed a monetary penalty of Rs8.00 lakh (Rupees Eight lakh only) on The Co-operative Bank of Rajkot Ltd., Rajkot, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Interest Rate on Deposits’ and ‘Master Direction - Know Your Customer (KYC)’. 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 by it during the personal hearing, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty. The bank (i) maintained savings bank accounts of 37 institutions whose entire income was not exempted from payment of Income-Tax under the Income-Tax Act, 1961 and (ii) did not carry out risk based periodic updation of KYC as per the prescribed periodicity.
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.
3 The Reserve Bank of India (RBI) has, by an order dated August 08, 2024, imposed a monetary penalty of Rs25,00,000/- (Rupees Twenty five lakh only) on Shikshak Sahakari Bank Limited, Nagpur (the bank), for non-compliance with certain directions issued by RBI on Limits on exposure to single and group borrowers. 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.
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, inter alia, 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, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI found, inter alia, that the charge of renewing the credit facilities of two groups of borrowers in excess of prescribed prudential exposure limit was sustained, warranting imposition of monetary penalty.
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. 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 (RBl) has, by an order dated July 12, 2024, imposed a monetary penalty of Rs50,000 (Rupees Fifty thousand only) on The Nashik Jilha Mahila Sahakari Bank Ltd, Nashik, Maharashtra (the bank), for contravention of the provisions of section 26 A (2) 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 section 47A(1)(c) read with section 46(4)(i) and section 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 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 provision 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 the charge of not transferring the eligible amount to the Depositor Education and Awareness Fund within the prescribed time period was 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.
5 The Reserve Bank of India (RBl) has, by an order dated August 08, 2024, imposed a monetary penalty of Rs2.00 lakh (Rupees Two Lakh only) on Maharashtra Nagari Sahakari Bank Limited, Latur, Maharashtra (the bank), for non-compliance with certain directions issued by RBI on lncome Recognition and Asset Classification (IRAC) norms and contravention of provisions of section 26A read with section 56 of the Banking Regulation Act, 1949 (BR Act). This penalty has been imposed in exercise of powers conferred on RBI under provisions of section 47A(1)(c) read with sections 46(4)(i) 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 RBI directions & statutory provision 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 RBI directions and provision of BR Act. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the charges of failure to classify certain loan accounts as NPA resulting into divergence in asset classification and not transferring the eligible amount to the Depositors Education and Awareness Fund within the prescribed time period were 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.
