RBI Imposes Rs63.10 Lakh Penalty on Surat People's Cooperative Bank, Bihar Awami Cooperative Bank
Moneylife Digital Team 27 September 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs63.10 lakh on two cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs61.60 lakh has been imposed on Gujrat-based Surat People's Cooperative Bank Ltd. Bihar Awami Cooperative Bank Ltd was fined Rs1.50 lakh. 
 
Surat People's Cooperative Bank has been penalised for non-compliance with directions issued by RBI on income recognition, asset classification, provisioning and other related matters, loans and advances to directors and their relatives, and firms or concerns in which they are interested, maintenance of deposit accounts and customer service.
 
A recent statutory inspection by RBI revealed several issues concerning Surat People's Cooperative Bank. The inspection found that the Bank failed to classify loan accounts of some borrowers as non-performing assets (NPAs) and improperly sanctioned or renewed loans related to specific directors. 
 
Surat People's Cooperative Bank also levied and recovered penal charges from inoperative savings and current accounts due to non-maintenance of minimum balances. Furthermore, it charged certain customers for SMS alerts, even though it did not have their mobile numbers on record.
 
Bihar Awami Cooperative Bank has been penalised for contravention of the provisions of section 26A of the Banking Regulation Act (BR Act) and for non-compliance with directions issued by RBI on know-your-customer (KYC). The Bank failed to transfer eligible amounts to the depositor education and awareness fund (DEAF) within the prescribed period and failed to review the risk categorisation of its customers as per the prescribed periodicity.
 
"After considering the reply and oral submissions of both the banks during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," RBI says.
 
In both cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered into with their customer.
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