RBI Slaps Rs19.50 Lakh Penalty on 4 Cooperative Banks, 1 NBFC
Moneylife Digital Team 10 January 2025
Reserve Bank of India (RBI) has imposed penalties of Rs19.50 lakh on four cooperative Banks and a non-banking financial company (NBFC) for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs17.50 lakh has been imposed on Janata Sahakari Bank Ltd from Pune.
 
The other entities penalised by the RBI include Belgaum District Revenue Employees Cooperative Bank Ltd from Karnataka, Indian School Finance Company Pvt Ltd from Telangana and Batlagundu Cooperative Urban Bank Ltd and Sivakasi Cooperative Urban Bank Ltd from Tamil Nadu.
 
Janata Sahakari Bank has been penalised for non-compliance with directions issued by RBI on income recognition, asset classification, provisioning and other related matters -urban cooperative banks (UCBs) and maintenance of deposit accounts – primary UCBs.
 
RBI's statutory inspection revealed two key issues with Janata Sahakari Bank. First, the Pune-based lender failed to classify some borrower's loan accounts as non-performing assets (NPAs). Second, it imposed penal charges on savings bank accounts for non-maintenance of the minimum balance at a flat rate rather than basing the charges proportionately on the shortfall amount.
 
Sivakasi Cooperative Urban Bank, Batlagundu Cooperative Urban Bank and Belgaum District Revenue Employee's Cooperative Bank were each fined Rs50,000 for failing to comply with RBI's know-your-customer (KYC) directions. These lenders did not upload their customer's KYC records to the Central KYC Records Registry (CKYCR) within the required timeframe.
 
Indian School Finance Company, an NBFC based in Telangana, has also been fined Rs50,000 for failing to comply with RBI's directions on managing risks and the code of conduct for outsourcing financial services by NBFCs. The NBFC had outsourced one of its core management functions, like internal audit, to an external auditor.
 
In all five cases, RBI said penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transaction or agreement they entered into with their customers.
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