RBI Slaps Rs1.60 Lakh Penalty on Bally Cooperative Bank and Sathamba People's Cooperative Bank
Moneylife Digital Team 12 November 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs1.60 lakh on two cooperative banks, one each from West Bengal and Gujarat, for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs1.10 lakh has been imposed on Bally Cooperative Bank Ltd from West Bengal.
 
The other bank penalised by RBI is Sathamba People's Cooperative Bank Ltd from Gujarat.
 
Bally Cooperative Bank has been penalised for non-compliance with directions issued by RBI on priority sector lending (PSL) targets and classification and specific directions for contributing to micro and small enterprises (MSE) refinance fund due to a shortfall in achievement of PSL.
 
RBI statutory inspection found that Bally Cooperative Bank failed to deposit the required amount into the MSE refinance fund, managed by the Small Industries Development Bank of India (SIDBI). This deposit was necessary to cover a shortfall in meeting the priority sector lending (PSL) target for FY22-23. Bally Cooperative Bank missed the deadline for this deposit and did not act even after receiving a cautionary letter.
 
Sathamba People's Cooperative Bank was penalised Rs50,000 for non-compliance with directions issued by RBI on know-your-customer (KYC). RBI found out that the Bank had failed to put in place a system for periodic updation of KYC of its customers and carry out periodic reviews of risk categorisation of accounts at least once in six months.
 
"After considering the reply and oral submissions of both the banks during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," the central bank says.
 
In both cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered into with their customer.
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