RBI Imposes Rs51.40 Lakh Penalty on 5 Cooperative Banks

Moneylife Digital Team 31 December 2024

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs51.40 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs36.40 lakh has been imposed on Punjab Gramin Bank.

Other banks penalised by RBI are Yavatmal Urban Cooperative Bank Ltd from Maharashtra, Kaithal Central Cooperative Bank Ltd from Haryana, Prime Cooperative Bank Ltd from Gujarat and Kolikata Mahila Cooperative Bank Ltd from West Bengal.

Punjab Gramin Bank and Kaithal Central Cooperative Bank have been fined Rs36.40 lakh and Rs5 lakh, respectively, for violating the provisions of Section 26A of the Banking Regulation Act (BR Act)

"The statutory inspection of both these banks conducted by the National Bank for Agriculture and Rural Development (NABARD) revealed that both the banks had failed to transfer eligible unclaimed amounts to the depositor education and awareness fund (DEA Fund) within the prescribed time," RBI says.

Yavatmal Urban Cooperative Bank has been penalised Rs5 lakh for non-compliance with specific directions issued by RBI under the supervisory action framework (SAF) and directions issued by RBI on exposure norms and statutory or other restrictions for urban cooperative banks (UCBs). RBI found that Yavatmal Urban Cooperative Bank had sanctioned fresh loans and advances carrying risk weights of more than 100% in violation of the directions issued under SAF and sanctioned loans to nominal members in excess of the prescribed regulatory limit.

Gujarat-based Prime Cooperative Bank has been fined Rs4 lakh for failing to comply with RBI directions on customer protection. These directions include limiting customers' liability in unauthorised electronic banking transactions and implementing a basic cybersecurity framework for (UCBs), following a graded approach.

RBI found that the Prime Cooperative Bank had not provided customers with the facility to report unauthorised electronic banking transactions via SMS, email, or a toll-free number. Additionally, it did not enable an instant response option for replying to the SMS and email alerts sent by the bank during FY22-23. The Bank also failed to implement specific cybersecurity control measures as required by RBI's prescribed framework.

Kolikata Mahila Cooperative Bank has been penalised Rs1 lakh for contravention of provisions of Section 31 of the BR Act. The Bank had failed to submit its accounts and balance sheet together with the auditor's report for FY23-24 to RBI within the stipulated period of three months from the close of FY23-24.

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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