RBI Imposes Rs60.30 Lakh Penalty on 5 Cooperative Banks for Regulatory Violations

Moneylife Digital Team 19 April 2024

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs60.30 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs43.30 lakh has been imposed on Gujarat-based Rajkot Nagarik Sahakari Bank Ltd.

Other banks penalised by RBI are New Delhi-based Kangra Cooperative Bank Ltd, Lucknow-based Rajdhani Nagar Sahkari Bank Ltd and Uttarakhand-based Zila Sahakari Bank Ltd and District Cooperative Bank Ltd.

RBI's statutory inspection revealed that Rajkot Nagarik Sahakari Bank had granted certain loans to firms or concerns in which the directors of the bank were interested as directors or trustees, opened savings deposit accounts of certain ineligible entities and levied penal charges for non-maintenance of minimum balance in certain inoperative accounts.

New Delhi-based Kangra Cooperative Bank was fined Rs5 lakh for non-compliance with the directions issued by RBI on basic cyber security framework for primary urban cooperative banks (UCBs) and comprehensive cyber security framework for primary UCBs. RBI found that the charge of not putting certain mandated controls under the cyber security framework for UCBs was sustained.

Zila Sahakari Bank was penalised Rs5 lakh for contravention to the provisions of section 20(1)(b) and section 26A(2) of the Banking Regulation Act (BR Act).

The statutory inspection conducted by the National Bank for Agriculture and Rural Development (NABARD) revealed that Zila Sahakari Bank had not transferred eligible unclaimed amounts to the depositor education and awareness fund (DEAF) within the prescribed time limit and sanctioned a loan to its director when it was prohibited.

Rajdhani Nagar Sahkari Bank was penalised Rs5 lakh for non-compliance with directions issued by RBI on income recognition, asset classification, provisioning and other related matters –UCBs. RBI says that the charge of not classifying certain loan accounts as non-performing under the IRAC norms was sustained.

Uttarakhand-based District Cooperative Bank was fined Rs2 lakh for contravention of the provisions of section 20 (1)(b) of the BR Act. RBI found that the charge of renewing and thereby granting a secured loan to its directors or firm in which they were interested 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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