RBI Slaps Rs13.50 Lakh Penalty on 4 Cooperative Banks from Gujarat, 1 from Odisha
Moneylife Digital Team 05 January 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs13.50 lakh on five cooperative banks, including four from Gujarat and one from Odisha, for non-compliance with the directions issued by the banking regulator. 
 
The highest penalty of Rs5 lakh each has been imposed on Vadodara-based Shree Bharat Cooperative Bank Ltd and Sankheda Nagarik Sahakari Bank Ltd from the Chhotaudepur district of the same state. Other banks fined by RBI include The Limdi Urban Cooperative Bank Ltd and The Bhuj Commercial Cooperative Bank Ltd from Gujarat, and The Cooperative Urban Bank Ltd from Odisha.
 
Shree Bharat Cooperative Bank failed to comply with directions on the placement of deposits with other banks by primary (urban) cooperative banks (UCBs) and RBI cooperative banks - the interest rate on deposits. 
 
"The statutory inspection of the bank conducted by RBI regarding its financial position as of 31 March 2022, and examination of the inspection report (IR), risk assessment report (RAR) and all related correspondence revealed that the Bank had breached the prudential inter-bank gross exposure limit as well as prudential inter-bank counterparty exposure limit and not paid interest on matured term deposits from the date of maturity till the date of their repayment at the applicable rate," RBI says.
 
The Sankheda Nagarik Sahakari Bank was found non-compliant with RBI directions on loans and advances to directors, relatives and firms or concerns in which they are interested and placement of deposits with other banks by primary UCBs. RBI says the Bank sanctioned loans where relatives of directors of The Sankheda Nagarik Sahakari Bank stood as guarantors and breached the prescribed inter-bank gross exposure limit as well as the prudential inter-bank counterparty exposure limit. 
 
RBI imposed a penalty of Rs1.50 lakh on Odisha-based The Cooperative Urban Bank for non-compliance with the directions on membership of credit information companies (CICs) and exposure norms and statutory/other restrictions for UCBs. 
 
Statutory inspection for the year ending 31 March 2022 and examination of the IR, RAR and all related correspondence revealed that The Cooperative Urban Bank failed to upload credit information to CICs, breached the prudential inter-bank (gross) exposure limit and breached the prudential inter-bank counterparty limit. 
 
Kachchh district-based Bhuj Commercial Cooperative Bank was slapped with a penalty of Rs1.50 lakh for non-compliance with RBI directions on know your customer (KYC) and cooperative banks - interest rate on deposits. 
 
RBI says Bhuj Commercial Cooperative Bank failed to categorise its customers as low, medium or high-risk category and accepted interest-free deposit accounts other than current accounts. 
 
Limdi Urban Cooperative Bank was also found to be non-compliant with RBI directions on cooperative banks - the interest rate on deposits. "The Bank had not paid interest on matured term deposits from the date of maturity till the date of their repayment at the applicable rate," RBI says.
 
Further, RBI says its action against these five banks is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.
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