RBI Imposes Rs4.55 Lakh Penalty on 5 Cooperative Banks

Moneylife Digital Team 29 December 2023

Investor Interest

Reserve Bank of India (RBI) has imposed monetary penalties on five cooperative banks, citing the violation of different laws prescribed by the regulator. Three banks are from Gujarat, while others belong to Maharashtra and West Bengal. RBI has levied a fine of Rs2 lakh, the highest among the banks, on Sardargunj Mercantile Cooperative Bank Ltd from Gujarat.

Other banks penalised by RBI are United Cooperative Bank Ltd and Panchsheel Mercantile Cooperative Bank Ltd from Gujarat. Sree Chaitanya Cooperative Bank Ltd and Vidyananad Cooperative Bank Limited are from West Bengal and Maharashtra, respectively.

Sardargunj Mercantile Cooperative Bank and Panchsheel Mercantile Cooperative Bank are penalised Rs2 lakh and Rs50,000, respectively, for non-compliance with the directions issued by RBI on placement of deposits with other banks by primary urban cooperative banks (UCBs).

The statutory inspection of both the banks conducted by RBI about their financial position as of 31 March 2022 and examination of the inspection report (IR), risk assessment report (RAR) and all related correspondence revealed that these banks had breached the prudential inter-bank counterparty exposure limit.

Further, RBI imposed a penalty of Rs1 lakh each on United Cooperative Bank and Vidyananad Cooperative Bank.

United Cooperative Bank was penalised for breaching the prudential inter-bank gross exposure limit and the prudential inter-bank counterparty exposure limit.

Vidyananad Cooperative Bank was penalised for non-compliance with the directions issued by RBI on exposure norms and statutory or other restrictions - UCBs’ and on placement of deposits with other banks by primary UCBs and investments by primary UCBs. The RAR and all correspondence related revealed, that the Bank had breached the prudential inter-bank gross exposure limit.

Sree Chaitanya Cooperative Bank was fined Rs5,000 for non-compliance with the directions issued by RBI on membership of credit information companies (CICs). The IR and all related correspondence revealed that the Bank had failed to obtain membership of any of the four CICs.

After considering the reply and oral submissions of all banks during the personal hearing, RBI says it has concluded that the non-compliance charges with its directions were substantiated and warranted the imposition of monetary penalties.

RBI says the penalty imposed on these five 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 these banks with their customers.

Comments