Reserve Bank of India (RBI) has imposed Rs3.10 lakh penalties on four cooperative banks for violating various laws prescribed by RBI. Of these, three belong to Maharashtra and the other to Telangana. The banks penalised are Patan Cooperative Bank Ltd, Prathamik Shikshak Sahakari Bank Ltd, Rajarshi Shahu Sahakari Bank Ltd from Maharashtra, and District Cooperative Central Bank Ltd from Telangana.
All the banks from Maharashtra were penalised Rs1 lakh each, while the Telangana-based Bank is fined Rs10,000.
Patan Cooperative Bank has been slapped with a fine of Rs1 lakh for non-compliance with RBI directions on know your customer (KYC). The statutory inspection of Patan Cooperative Bank conducted by RBI with reference to its financial position as of 31 March 2022 and examination of the risk assessment report (RAR) and all correspondence related revealed that the Bank had failed to carry out a periodic review of risk categorisation of accounts.
A penalty of Rs1 lakh has been imposed on Prathamik Shikshak Sahakari Bank for non-compliance with the directions issued by RBI on the management of advances-urban cooperative banks (UCBs). The Bank had sanctioned gold loans beyond the prescribed regulatory limit under the bullet repayment scheme.
Similarly, a Rs1 lakh fine was slapped on Rajarshi Shahu Sahakari Bank for non-compliance with RBI's directions on maintaining deposit accounts - primary UCBs. The inspection report (IR), RAR, and all related correspondence revealed that the Bank had imposed fixed penal charges for a shortfall in maintaining minimum balance in savings bank accounts instead of imposing penal charges proportionate to the extent of the shortfall. Rajarshi Shahu Sahakari Bank also failed to notify its customers about the shortfall in minimum balance before levying charges.
Telangana-based District Cooperative Central Bank was penalised Rs10,000 for non-compliance with the directions issued by the National Bank for Agriculture and Rural Development (NABARD) on review of frauds – guidelines on monitoring and reporting system read with frauds - guidelines for classification, reporting and monitoring of frauds.
The statutory inspection of the District Cooperative Central Bank regarding its financial position as of 31 March 2022 and examination of the IR and all correspondence related revealed that the Bank had not reported fraud cases to NABARD within the stipulated timelines.
RBI says, "After considering the reply of all the banks to the notices, submissions made during the personal hearing, and additional information furnished pursuant to the personal hearing, RBI came to the conclusion that the charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty."
RBI says the penalty imposed on these four cooperative banks is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered by the Bank with its customers.