RBI Imposes Rs9 Lakh Penalty on 4 Cooperative Banks

Moneylife Digital Team 11 October 2024

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs9 lakh on four cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs5 lakh has been imposed on Himachal Pradesh-based Parwanoo Urban Cooperative Bank Ltd.

Other banks penalised by the RBI include Sonbhadra Nagar Sahkari Bank Ltd from Uttar Pradesh (UP) and Mansing Cooperative Bank Ltd and Jaihind Urban Cooperative Bank Ltd from Maharashtra.

Parwanoo Urban Cooperative Bank has been penalised for failing to comply with specific directions issued by RBI under its supervisory action framework (SAF).

RBI found that Parwanoo Urban Cooperative Bank had violated SAF guidelines by paying dividends, which was not permitted under the issued directions.

UP-based Sonbhadra Nagar Sahkari Bank has been fined Rs2.50 lakh for contravention of the provisions of section 26A of the Banking Regulation Act (BR Act). RBI determined that the Bank failed to transfer eligible amounts to the depositor education and awareness fund (DEAF) within the required timeframe.

RBI conducted a statutory inspection of Mansing Cooperative Bank, reviewing its financial position as of 31 March 2023. During the inspection, it was found that the Bank had failed to classify certain loan accounts as non-performing assets (NPAs) and did not make the required provisions for these loans, as per the norms for income recognition, asset classification, and provisioning. Due to this failure, RBI imposed a penalty of Rs1 lakh on Mansing Cooperative Bank.

Jaihind Urban Cooperative Bank has been fined Rs50,000 for failing to comply with its guidelines on maintaining deposit accounts for primary UCBs. RBI identified that the Bank had not conducted the required annual review of accounts that had been inactive for more than a year, which led to the penalty.

RBI says its action against these four 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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