Reserve Bank of India (RBI) has imposed a penalty of Rs89.95 lakh on five cooperative banks for non-compliance with RBI directions or prohibitory orders. The highest penalty of Rs59.90 lakh has been imposed on Nashik-based Janalaxmi Cooperative Bank Ltd.
Other banks penalised by RBI are: Solapur Janata Sahakari Bank Ltd, Mathura Jilla Sahkari Bank Ltd from Uttar Pradesh, Chikkamagaluru District Cooperative Central Bank Ltd from Karnataka and Dindigul Urban Cooperative Bank Ltd from Tamil Nadu.
Janalaxmi Cooperative Bank was penalised for non-compliance with certain directions issued by RBI on the constitution of the board of management (BoM) in primary (urban) cooperative banks (UCBs), exposure norms and statutory or other restrictions – UCBs and an order issued under supervisory action framework (SAF) for primary UCBs.
The statutory inspection revealed that Janalaxmi Cooperative Bank had failed to constitute a BoM within the extended timeline granted by RBI, sanctioned credit facilities to its nominal members over the prescribed limit and opened or renewed term deposits at interest rates higher than those offered by the State Bank of India (SBI) for the same tenor.
Solapur Janata Sahakari Bank was fined Rs28.30 lakh for non-compliance with certain provisions of RBI directions on the constitution of BoM in primary UCBs and prohibitory orders issued under SAF. RBI says the Bank appointed a member on its BoM, who did not satisfy the fit and proper criteria. Despite directions from RBI, the Bank did not reconstitute the BoM within the specified time. It also contravened the prohibitory order or direction issued under SAF when it sanctioned fresh loans carrying risk weights of more than 100% during FY21-22.
Uttar Pradesh-based Mathura Jilla Sahkari Bank was penalised Rs1 lakh for non-compliance with provisions of Section 9 of the Banking Regulation Act (BR Act). RBI found that the charge of not disposing of an immovable property, which was not used for its own purposes, was sustained within the maximum period stipulated under the BR Act.
The National Bank for Agriculture and Rural Development (NABARD) conducted a statutory inspection of the Chikkamagaluru District Cooperative Central Bank. The charge of delay in reporting frauds to NABARD was sustained.
RBI, therefore, imposed a penalty of Rs50,000 on the Chikkamagaluru District Cooperative Central Bank.
Dindigul Urban Cooperative Bank was penalised Rs25,000 for non-compliance with directions on exposure norms and statutory or other restrictions UCBs. RBI found that the charge of sanctioning of loans to nominal members above the prescribed ceiling 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.
