RBI Imposes Rs7.25 Lakh Penalty on 4 Cooperative Banks from Maharashtra, 1 from TN for Non-compliance

Moneylife Digital Team 16 July 2024

Reserve Bank of India (RBI) has imposed a penalty of Rs7.25 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator.

The banks penalised by RBI are: Mahabaleshwar Urban Cooperative Bank Ltd, Nagarik Sahakari Bank Ltd and Abasaheb Patil Rendal Sahakari Bank Ltd, Krishna Sahakari Bank Ltd from Maharashtra and Sivagangai District Central Cooperative Bank Ltd from Tamil Nadu.

Mahabaleshwar Urban Cooperative Bank has been penalised Rs2 lakh for non-compliance with the directions issued by RBI on exposure norms and statutory or other restrictions – urban cooperative banks (UCBs) and prudential norms on capital adequacy for UCBs.

"The statutory inspection of Mahabaleshwar Urban Cooperative Bank revealed that the Bank had sanctioned unsecured advances beyond prescribed regulatory limit and not adhered to share linking to borrowings guidelines while sanctioning loans," RBI says.

Nagarik Sahakari Bank was also penalised Rs2 lakh for non-compliance with RBI's directives on maintaining deposit accounts for primary UCBs. RBI found that the Bank had improperly charged customers for activating their inactive accounts.

Satara-based Krishna Sahakari Bank was also fined Rs2 lakh for failing to comply with RBI directives on exposure norms and other statutory restrictions applicable to UCBs. RBI investigation confirmed that the Bank had exceeded prescribed limits by approving loans for nominal members.

Abasaheb Patil Rendal Sahakari Bank was fined Rs1 lakh for failing to comply with specific directives issued by the RBI under the supervisory action framework (SAF). RBI found that the Bank had sanctioned new loans and advances with risk weights exceeding 100%, violating the directives under SAF.

Sivagangai District Central Cooperative Bank was fined Rs25,000 for failing to comply with directives from the National Bank for Agriculture and Rural Development (NABARD) on fraud guidelines, including classification, reporting, and monitoring.

RBI confirmed that the charge of delayed fraud reporting to NABARD was upheld.

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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