Reserve Bank of India (RBI) has imposed a penalty of Rs95.40 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs61.60 lakh has been imposed on Mumbai-based Bassein Catholic Cooperative Bank Ltd for failing to report frauds in time and not carrying out periodic reviews of risk categorisation of accounts.
Other banks penalised by RBI are Nagpur Nagarik Sahakari Bank Ltd, Himachal Pradesh State Cooperative Bank Ltd from Shimla, while Tirumangalam Cooperative Urban Bank Ltd and Tirupattur Urban Cooperative Bank Ltd are from Tamil Nadu.
Bassein Catholic Cooperative Bank was penalised for non-compliance with RBI directions on frauds in urban cooperative banks (UCBs), monitoring and reporting mechanism changes, know your customer (KYC), maintenance of deposit accounts and management of advances.
Further, RBI's statutory inspection revealed that Bassein Catholic Cooperative Bank had levied penal charges for non-maintenance of minimum balances in dormant or inoperative savings bank and current deposit accounts and restructured credit facilities without establishing the borrowers' financial viability and reasonable certainty of repayment.
Nagpur Nagarik Sahakari Bank was fined Rs28.30 lakh for non-compliance with RBI directions on interest rates on deposits and KYC.
RBI says that the Bank had not paid interest on original principal deposit amounts for the Sundays, holidays and non-business working days on which certain term deposits had matured while making payment of the proceeds of those deposits on the succeeding working day. The lender also failed to pay interest in the balances lying in certain current accounts of deceased individual depositors or sole proprietorship concerns from the date of their death till the date of repayment to their claimants and certain matured term deposits at the rate applicable to savings deposits, for the period they remained unclaimed after maturity while making repayment of such deposits. The Bank also did not undertake periodic reviews of risk categorisation of its customer accounts at least once every six months.
Shimla-based Himachal Pradesh State Cooperative Bank was penalised Rs5 lakh for contravention of the provisions of section of the Banking Regulation Act (BR Act). RBI found that the charge of not transferring the eligible amounts to the Depositor Education and Awareness Fund (DEAF) within the prescribed period was sustained.
RBI conducted the statutory inspection of Tirumangalam Cooperative Urban Bank regarding its financial position as of 31 March 2022, revealing that the charge of extending loans to its directors and their relatives was sustained.
RBI, therefore, imposed a penalty of Rs25,000 on Tirumangalam Cooperative Urban Bank.
Tirupattur Urban Cooperative Bank from Tamil Nadu is also penalised Rs25,000 for non-compliance with directions on exposure norms and statutory or other restrictions for UCBs. RBI found that the charge of sanctioning loans to nominal members over 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.
