RBI Imposes Rs25,000 to Rs3.10 Lakh Penalties on 9 Cooperative Banks for Non-compliance
Moneylife Digital Team 15 November 2022
The Reserve Bank of India (RBI) has imposed monetary penalties on nine cooperative banks, including two each from Gujarat, Madhya Pradesh (MP) and Odisha and one each from Maharashtra, Jharkhand and Chhattisgarh. All these lenders were found violating RBI's guidelines, including on loans and advances where relatives of directors had given surety or were guarantors for the debt, non-maintenance of minimum cash reserve ratio (CRR), failure to review of risk categorisation of accounts, among others. The penalties imposed on these cooperative banks range from Rs25,000 to Rs3.10 lakh. The Berhampur Cooperative Urban Bank Ltd was levied the highest fine of Rs3.10 lakh for failing to adhere to RBI directions mainly on prudential inter-bank (gross) exposure norms and prudential inter-bank counter-party limit.
 
1. The Berhampur Cooperative Urban Bank Ltd, Odisha
 
RBI imposed a penalty of Rs3.10 lakh on the lender for contravention of and non-compliance with the directions issued by the central bank on exposure norms and statutory and other restrictions- urban cooperative banks (UCBs), certain provisions of the RBI know-your-customer (KYC) direction and depositor education and awareness fund (DEAF). 
 
The inspection report of the Bank, based on its financial position as of 31 March 2020 and scrutiny of the records of the Bank revealed that Berhampur Cooperative Urban Bank had failed to comply with RBI directions on prudential inter-bank (gross) exposure norms and prudential inter-bank counter-party limit, allot unique customer identification codes (UCIC) to its individual customers and submit a correct certificate regarding transfer to the DEAF. 
 
After considering the Bank's reply and additional submissions, RBI concluded that the charges of non-compliance with RBI directions were substantiated and warranted the imposition of a monetary penalty.
 
2. The Kendrapara Urban Co-operative Bank Ltd, Kendrapara, Odisha
 
RBI imposed a monetary penalty of Rs50,000 on the Bank for contravention of and non-compliance with its directions DEAF. 
 
A scrutiny of the Bank's records revealed violation and non-compliance with directions issued by RBI to the extent the Bank had failed to transfer all eligible balances to the DEAF but had submitted an incorrect certificate in this regard. 
 
3. The Jamshedpur Urban Cooperative Bank Ltd, Jamshedpur, Jharkhand
 
RBI imposed a monetary penalty of Rs1 lakh on The Jamshedpur Urban Cooperative Bank Ltd for the Bank's failure to adhere to specific directions under the supervisory action framework (SAF). 
 
The inspection report of the Bank, based on its financial position as of 31 March 2020, revealed non-adherence to and violation of specific directions issued to the bank by RBI under SAF.
 
After considering the bank's reply and additional submissions made by it, RBI concluded that the charge of non-compliance with its directions was substantiated and warranted the imposition of a monetary penalty.
 
4. Krishna Mercantile Co-operative Bank Ltd, Bhopal (MP)
 
RBI imposed a monetary penalty of Rs50,000 on Krishna Mercantile Co-operative Bank Ltd, Bhopal (MP) for contravention of and non-compliance with the directions issued by the central bank to UCBs on exposure norms, statutory and other restrictions.
 
The risk assessment report (RAR) of the Bank, based on its financial position as of 31 March 2021, revealed that the Bank had exceeded the prudential inter-bank (gross) exposure limit in contravention of and non-compliance with the directions issued by RBI.
 
5. Renuka Nagarik Sahakari Bank Maryadit, Ambikapur (Chhattisgarh)
 
RBI imposed a monetary penalty of Rs1 lakh on the Ambikapur-based bank for contravention of and non-compliance with the directions issued by the central bank to UCBs on exposure norms, statutory and other restrictions, as well as KYC norms.
 
The RAR of the Bank, based on its financial position as of 31 March 2021, revealed that the Bank had not complied with the directions on prudential inter-bank (gross) exposure limit, had not carried out periodic reviews of risk categorisation of its customers, and did not have a robust system to detect suspicious transactions, in contravention of and non-compliance with the aforesaid directions issued by RBI.
 
After considering the Bank's replies and oral submissions made during the personal hearings, the central bank concluded that the charges of non-compliance with RBI directions were substantiated and warranted the imposition of a monetary penalty.
 
6. Jila Sahakari Kendriya Bank Maryadit, Balaghat (MP)
 
RBI imposed a monetary penalty of Rs1 lakh on the Balaghat-based bank for contravention of and non-compliance with the provisions of the Banking Regulation Act (Act) and directions issued by the National Bank for Agriculture and Rural Development (NABARD) on frauds - guidelines for classification, reporting and monitoring. 
 
RBI's inspection report for FY19-20 revealed that the Bank had delayed submission of off-site surveillance (OSS) returns to NABARD and had reported frauds to NABARD with delay in contravention of and non-compliance with the provisions of the Act and directions issued by NABARD.
 
7. Osmanabad Janata Sahakari Bank Ltd, Osmanabad (Maharashtra)
 
RBI imposed a monetary penalty of Rs2.50 lakh on Osmanabad Janata Sahakari Bank Ltd for the Bank's failure to adhere to the directions on KYC.
 
The inspection report of the Bank, based on its financial position as of 31 March 2020, revealed that the Bank had not reviewed risk categorisation of accounts and updation of KYC of its customers as per prescribed periodicity, in contravention of and non-compliance with the directions issued by RBI.
 
"After considering the bank's replies and oral submissions made during the personal hearing, RBI concluded that the charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty," the central bank says.
 
8. The Santrampur Urban Co-operative Bank Ltd, Santrampur, Mahisagar (Gujarat)
 
RBI imposed a monetary penalty of Rs25,000 on the Santrampur-based bank for failing to maintain statutory reserves like CRR and statutory liquidity ratio (SLR) as mandated for primary UCBs.
 
The statutory inspection of the Bank conducted by RBI regarding the Bank's financial position, as of 31 March 2019, and examination of the inspection report and all related correspondence about it, revealed that the Bank had not maintained minimum CRR, resulting in contravention of directions issued by the banking regulator.
 
9. The Nawanagar Co-operative Bank Ltd, Jamnagar (Gujarat) 
 
The central bank imposed a monetary penalty of Rs25,000 on the Jamnagar-based bank for failing to follow RBI directions on loans and advances to directors and directors providing surety and becoming guarantors for loans.
 
The statutory inspection of the Bank conducted by RBI about its financial position as of 31 March 2021, the inspection report and risk assessment report and examination of all related correspondence revealed that Nawanagar Co-operative Bank had sanctioned a loan, where a relative of its director stood as surety or guarantor, resulting in contravention of directions issued by RBI.
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