Reserve Bank of India (RBI) has imposed a penalty of ₹3.60 lakh on five cooperative banks and Vedvyas Finance Pvt Ltd, a non-banking financial company (NBFC) from Odisha, for non-compliance with the directions issued by the banking regulator. The highest penalty of ₹1 lakh has been imposed on Mysore and Chamarajnagar District Cooperative Central Bank Ltd from Karnataka and Kodagu District Cooperative Central Bank Ltd from Karnataka
The other entities penalised by the RBI include: Kerala-based Tanur Cooperative Urban Bank Ltd, Rajasthan-based Pali District Central Co-operative Bank Ltd and Maharashtra-based Loknete R.D. Appa, Kshirsagar Sahakari Bank Ltd
Kodagu District Cooperative Central Bank has been penalised for contravening the provisions of Section 20 of the Banking Regulation Act, 1949 (BR Act).
A statutory inspection of Kodagu District Cooperative Central Bank, conducted by the National Bank for Agriculture and Rural Development (NABARD) on behalf of RBI, revealed that the lender had sanctioned loans to its directors, in violation of regulatory norms.
Mysore and Chamarajnagar District Cooperative Central Bank Ltd has also been penalised ₹1 lakh for contravening the provisions of Section 20 of the Banking Regulation Act, 1949 (BR Act), after it was found that the lender had held shares in a cooperative society in violation of the Act and failed to upload customers know-your-customer (KYC) records to the central KYC records registry (CKYCR) within the prescribed timeline.
Rajasthan-based Pali District Central Cooperative Bank has been fined ₹50,000 for non-compliance with certain directions issued by RBI on KYC. The lender had failed to put in place a system for periodic review of account risk categorisation, with a minimum frequency of once every six months.
RBI also inspected Tanur Cooperative Urban Bank and found out that the lender had failed to upload the KYC records of customers onto CKYCR.
As a result, RBI imposed a penalty of ₹50,000 on Tanur Cooperative Urban Bank.
Maharashtra-based Loknete RD Appa Kshirsagar Sahakari Bank has been penalised ₹30,000 for non-compliance with certain directions issued by the RBI on loans and advances to directors, their relatives and firms or concerns in which they have an interest, as well as for contravening the provisions of Section 20(1) and Section 35(2) of the BR Act. RBI found that the lender had sanctioned loans to two of its directors and failed to furnish the requisite information sought by the inspecting officer during the inspection.
Vedvyas Finance has also been penalised ₹30,000 for failing to comply with certain governance-related directions. RBI found that the NBFC did not obtain prior written approval before appointing a director. This led to a change in its management, as more than 30% of its directors, excluding independent directors, were replaced without the required permission.
In all six cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transaction or agreement they entered into with their customers.
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