RBI Imposes Rs9.25 Lakh Penalty on 5 Cooperative Banks
Moneylife Digital Team 08 November 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs9.25 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs5 lakh has been imposed on Karnataka-based Shree Mahabaleshwar Cooperative Bank Ltd.
 
Other banks penalised by RBI are Sree Charan Souhardha Cooperative Bank Ltd from Bengaluru, Srirangam Cooperative Urban Bank Ltd from Tamil Nadu, Nilambur Cooperative Urban Bank Ltd from Kerala and Manvi Pattana Souharda Sahakari Bank Niyamitha from Karnataka.
 
Shree Mahabaleshwar Cooperative Bank has been penalised for non-compliance with directions issued by RBI on loans and advances to directors, their relatives and firms or concerns in which they are interested. 
 
RBI's statutory inspection found that Shree Mahabaleshwar Cooperative Bank had sanctioned multiple loans to relatives of directors.
 
Bengaluru-based Sree Charan Souhardha Cooperative Bank has been fined Rs2 lakh for non-compliance with directions issued by RBI on income recognition, asset classification, provisioning and other related matters for urban cooperative banks (UCBs) and specific directions issued under the supervisory action framework (SAF).
 
RBI found out that Sree Charan Souhardha Cooperative Bank had failed to classify certain loan accounts as non-performing assets (NPAs) in terms of income recognition, asset classification and provisioning norms and offered interest rates on deposits higher than those offered by State Bank of India (SBI) and sanctioned fresh loans and advances in non-adherence to directions issued under SAF.
 
Srirangam Cooperative Urban Bank has been penalised Rs1.50 lakh for non-compliance with RBI directions on loans and advances to directors, their relatives, and firms or concerns they are interested in, as well as specific directions issued under SAF. The Bank had sanctioned loans to relatives of directors and credit facilities to sectors having a high proportion of NPAs and fresh loans and advances carrying risk weights more than 100%, in non-adherence to the directions issued under SAF.
 
Nilambur Cooperative Urban Bank has been penalised Rs50,000 for non-compliance with directions issued by RBI under SAF. The lender had made donations in non-adherence to directions issued under SAF.
 
RBI conducted a statutory inspection of Manvi Pattana Souharda Sahakari Bank Niyamitha regarding its financial position as of 31 March 2023. The inspection revealed that the Bank had sanctioned fresh loans and advances and offered interest rates on deposits higher than that of SBI in non-adherence to directions issued under SAF. As a result, RBI imposed a penalty of Rs25,000 on Manvi Pattana Souharda Sahakari Bank Niyamitha. 
 
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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