RBI Imposes Rs14.50 Lakh Penalty on 5 Cooperative Banks for Regulatory Violations

Moneylife Digital Team 23 April 2024

Reserve Bank of India (RBI) has imposed a penalty of Rs14.50 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs5 lakh has been imposed on Punjab-based Nakodar Hindu Urban Cooperative Bank Ltd.

Other banks penalised by RBI are: Himachal Pradesh-based Jogindra Central Cooperative Bank Ltd, Haryana based Fatehabad Central Cooperative Bank Ltd and Maharashtra based Ambarnath Jai Hind Cooperative Bank Ltd and Panvel Cooperative Urban Bank Ltd.

Nakodar Hindu Urban Cooperative Bank was penalised for non-compliance with the direction issued by RBI on investments by primary urban cooperative banks (UCBs).

RBI's statutory inspection of Nakodar Hindu Urban Cooperative Bank revealed that the charge of breaching prudential inter-bank gross exposure limit was sustained.

Jogindra Central Cooperative Bank Ltd was fined Rs3.50 lakh for non-compliance with directions issued by National Bank for Agriculture and Rural Development (NABARD) on frauds-guidelines for classification, reporting and monitoring. The statutory inspection conducted by NABARD revealed that that the charge of delay in reporting of frauds was sustained.

Maharashtra based Ambarnath Jai Hind Co-operative Bank was fined Rs3 lakh for non-compliance with certain provisions of RBI directions on maintenance of deposit accounts - Primary UCBs. RBI found out that the Bank had collected fixed penal charges for shortfall in maintenance of minimum balance in the savings bank accounts without giving one month notice to customers regarding minimum balance requirement, penal charges for non-maintenance of minimum balance in inoperative accounts and charges for activation of inoperative accounts.

Fatehabad Central Cooperative Bank was penalised Rs2 lakh for contravention of the provisions of section 26A (2) of the Banking Regulation Act (BR Act).

RBI's statutory inspection revealed that Fatehabad Central Cooperative Bank did not transfer the eligible unclaimed amounts to the depositor education and awareness Fund (DEAF) within the prescribed time limit.

Panvel Cooperative Urban Bank was penalised Rs1 lakh for non-compliance with directions issued under supervisory action framework (SAF) for primary UCBs. RBI found, that the charge of sanctioning fresh loans carrying risk weight more than 100% in violation of specific directions issued under SAF was sustained.

RBI says its action against these five cooperative banks is based on deficiencies in regulatory compliance and is not intended to pronounce on the validity of any transaction or agreement entered into by the banks with their customers.

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