RBI Slaps Rs17 Lakh Penalty on 5 Cooperative Banks for Non-compliance

Moneylife Digital Team 10 April 2024

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs17 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs5 lakh each has been imposed on Dehradun-based Uttarakhand Grameen Bank and Jaipur-based Raj Laxmi Mahila Urban Cooperative Bank Ltd.

Other banks penalised by RBI are: Uttar Pradesh (UP)-based Nagar Sahkari Bank Ltd, Haryana-based Rohtak Central Cooperative Bank Ltd and Himachal Pradesh (HP)-based Parwanoo Urban Cooperative Bank Ltd.

Uttarakhand Grameen Bank was penalised for contravention of the provisions of Section 26 A (2) of the Banking Regulation Act (BR Act).

The statutory inspection conducted by the National Bank for Agriculture and Rural Development (NABARD) revealed that Uttarakhand Grameen Bank had delayed transferring eligible unclaimed amounts to the depositor education and awareness fund (DEAF).

Raj Laxmi Mahila Urban Cooperative Bank was penalised for non-compliance with the specific directions issued by RBI under the supervisory action framework (SAF).RBI says that the charge of non-compliance with directions to reduce the single exposure limit for fresh loans and advances by 50% of the applicable regulatory limits, was sustained.

UP-based Nagar Sahkari Bank was penalised Rs4 lakh for non-compliance with directions issued by RBI on income recognition, asset classification, provisioning (IRAC) and other related matters for urban cooperative banks (UCBs). RBI found that the charge of not classifying certain loan accounts as non-performing in accordance with the IRAC norms was sustained.

Further, RBI conducted the statutory inspection of Rohtak Central Cooperative Bank regarding its financial position as of 31 March 2022, revealing that the lender had not transferred eligible amount to DEAF within the prescribed period and sanctioned one unsecured loan and renewed a secured cash credit limit to two of its directors.

RBI, therefore, imposed a penalty of Rs2 lakh on Rohtak Central Cooperative Bank.

Parwanoo Urban Cooperative Bank was penalised Rs1 lakh for non-compliance with the directions relating to prudential norms on IRAC. RBI found that the charge of not classifying certain loan accounts as non-performing under IRAC norms 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.

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