Reserve Bank of India (RBI) has imposed a penalty of Rs7.95 lakh on four cooperative banks and GPT Sons Pvt Ltd for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs3 lakh has been imposed on Kapadwanj Peoples Cooperative Bank Ltd from Gujarat.
Other banks penalised by RBI are: Lunawada Nagrik Sahakari Bank Limited and Kheda People’s Cooperative Bank Ltd from Gujarat, Anandeshwari Nagrik Sahkari Bank Maryadit from Madhya Pradesh and GPT Sons from West Bengal.
Kapadwanj Peoples Cooperative Bank has been penalised for contravention of provisions of Section 26A of the Banking Regulation Act (BR Act) and non-compliance with directions issued by RBI on interest rate on deposits and know-your-customer (KYC).
RBI's statutory inspection revealed several irregularities at Kapadwanj Peoples Cooperative Bank. The lender failed to transfer eligible unclaimed amounts to the depositor education and awareness fund (DEAF) within the prescribed timeframe. It also accepted interest-free deposits in accounts other than current accounts and opened savings accounts for institutions whose entire income was not exempt from income-tax (I-T). Additionally, Kapadwanj Peoples Cooperative Bank neglected to update KYC information and review account risk categorisation as per the required periodic schedule, RBI says.
Lunawada Nagrik Sahakari Bank has been fined Rs2.10 lakh for failing to comply with various regulatory guidelines. The violations include non-adherence to directions regarding cooperative banks membership in credit information companies (CICs), area of operation, branch authorisation policy and regulations for opening or upgrading extension counters and automated teller machines (ATMs).
RBI found out that Lunawada Nagrik Sahakari Bank have failed to submit credit information of its borrowers to three CICs, opened an on-site ATM without prior approval and neglected to carry out risk-based KYC updates. The Bank also failed to review the risk categorisation of accounts as per the prescribed periodicity.
Kheda People’s Cooperative Bank was also penalised Rs2.10 lakh for failing to comply with RBI directions and guidelines on placing deposits with other banks by primary urban cooperative banks (UCBs), meeting priority sector lending (PSL) targets and classifications and contributing to the micro and small enterprises (MSE) refinance fund.
RBI discovered that Kheda People’s Cooperative Bank had breached the prudential inter-bank counterparty exposure limit and failed to deposit the required amount in the MSE Refinance Fund maintained with SIDBI. This was necessary to address the shortfall in PSL targets for FY22-23, but the lender did not comply within the stipulated time, even after receiving a cautionary letter.
Madhya Pradesh-based Anandeshwari Nagrik Sahkari Bank Maryadit has been penalised Rs50,000 for non-compliance with directions issued by RBI on KYC. The lender also failed to carry out risk categorisation of certain customers and review of risk categorisation of certain accounts once in six months.
Kolkata-based GPT Sons was fined Rs25,000 for non-compliance with the provisions of Section 45IC of the Reserve Bank of India Act, 1934 (RBI Act). GPT Sons failed to transfer 20% of its net profit for FY11-12, FY12-13, FY17-18 and FY20-21 to the statutory reserve, as of 31 March 2023.
RBI says its action against these four cooperative banks and GPT Sons 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.
