These actions on 5 coop banks are based on deficiencies in regulatory compliance
FinTech BizNews Service
Mumbai, January 19, 2024: The Reserve Bank of India (RBI) has, by separate orders in December, 2023 and January 2024, imposed a monetary penalty on each of 5 Co-operative banks. These actions on 5 coop banks are based on deficiencies in regulatory compliance, as per the press releases issued by the RBI on 18 January 2024.
RBI has imposed monetary penalty on Patdi Nagarik Sahakari Bank Limited, Dist. Surendranagar, Gujarat; Idar Nagarik Sahakari Bank Limited, Dist. Sabarkantha, Gujarat; Mehsana Nagrik Sahakari Bank, Gujarat; New India Co-operative Bank Limited, Mumbai and NKGSB Co-operative Bank Ltd.
1 The Reserve Bank of India (RBI) has, by an order dated December 26, 2023, imposed, a monetary penalty of Rs.10.00 lakh (Rupees Ten lakh only) on The Patdi Nagarik Sahakari Bank Limited, Patdi, Dist. Surendranagar, 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’, ‘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’, ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’. 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 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) made donations to a trust in which relative of one of the directors of the bank was interested, (ii) sanctioned loans to relative of one of its directors and also sanctioned loans wherein relatives of its directors stood as guarantors, (iii) breached the prudential inter-bank gross exposure limit as well as the prudential inter-bank counterparty exposure limit, and (iv) accepted interest-free deposits other than the current account deposits. 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.
2 The Reserve Bank of India (RBI) has, by an order dated December 22, 2023, imposed a monetary penalty of Rs.2.00 lakh (Rupees Two lakh only) on The Idar Nagarik Sahakari Bank Limited, Idar, Dist. Sabarkantha, 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 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 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.
3 The Reserve Bank of India (RBI) has, by an order dated December 29, 2023, imposed a monetary penalty of Rs.7.00 lakh (Rupees Seven lakh only) on Mehsana Nagrik Sahakari Bank Limited, Mehsana, 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’, ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’ and contravention of the provisions of section 26A (2) 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 the provisions of section 47A(1)(c) read with sections 46(4)(i) and 56 of the BR Act.
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, wherein a relative of one of the bank’s directors stood as guarantor, (ii) not paid interest on overdue matured term deposits from the date of maturity till the date of their repayment at the applicable rate, and (iii) not transferred eligible amount to Depositor Education and Awareness Fund. 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 charges of non-compliance with the aforesaid RBI directions and contravention of the aforesaid statutory provision was substantiated and warranted imposition of monetary penalty on the bank.
4 The Reserve Bank of India (RBI) has, by an order dated January 17, 2024, imposed a monetary penalty of Rs.15.00 lakh (Rupees Fifteen lakh only) on New India Co-operative Bank Limited, Mumbai (the bank) for non-compliance with the directions issued by RBI on ‘Donations/Contributions for public/charitable purposes out of profits of UCBs’. 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, 2021, and examination of the Risk Assessment Report, Inspection Report and all correspondence related thereto revealed, inter alia, that the bank had breached the prescribed ceiling on donations during Financial Year 2020-21. 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.
5 The Reserve Bank of India (RBI) has, by an order dated January 12, 2024, imposed a monetary penalty of Rs.50 lakh (Rupees Fifty lakh only) on NKGSB Co-operative Bank Ltd. (the bank) for non-compliance with the ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’ issued by RBI. 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, 2021, and examination of the Risk Assessment Report, Inspection Report and all correspondence related thereto revealed, inter alia, that the bank had opened and allowed transactions in current accounts of a company without undertaking customer due diligence procedure. 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.
