RBI Slaps Rs36.50 lakh Penalty on 5 Cooperative Banks from Maharashtra, Gujarat

Moneylife Digital Team 23 August 2024

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs36.50 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs25 lakh has been imposed on Nagpur-based Shikshak Sahakari Bank Ltd.

Other banks penalised by the RBI include Gujarat-based Cooperative Bank of Rajkot, Gandhidham Mercantile Cooperative Bank Ltd, and Maharashtra-based Nashik Jilha Mahila Sahakari Bank Ltd and Maharashtra Nagari Sahakari Bank Ltd.

Shikshak Sahakari Bank has been penalised for failing to comply with RBI's directives regarding limits on exposure to individual and group borrowers.

RBI's statutory inspection found that the Shikshak Sahakari Bank had violated the prudential exposure limits by renewing credit facilities for two groups of borrowers beyond the prescribed limit.

Gujarat-based Cooperative Bank of Rajkot has been fined Rs8 lakh for non-compliance with the directions issued by RBI on interest rates on deposits and master directions on know-your-customer (KYC). RBI found out that the Cooperative Bank of Rajkot maintained savings bank accounts of 37 institutions whose entire income was not exempted from payment of income tax (I-T) under the I-T Act, 1961 and did not carry out risk-based periodic updation of KYC as per the prescribed periodicity.

Further, Maharashtra Nagari Sahakari Bank was penalised Rs2 lakh for failing to comply with RBI directives related to income recognition and asset classification (IRAC) norms, as well as for violating Section 26A of the Banking Regulation Act (BR Act). RBI discovered that the Bank had not classified certain loan accounts as non-performing assets (NPA), resulting in discrepancies in asset classification. Additionally, the Bank did not transfer the eligible amounts to the depositors education and awareness fund (DEAF) within the prescribed time frame.

Gandhidham Mercantile Cooperative Bank was fined Rs1 lakh for not following RBI directions regarding donations to trusts and institutions where bank directors or their relatives hold positions or have an interest. RBI statutory inspection confirmed that the Bank had donated to a trust in which directors or their relatives were involved, thus upholding the charge against them.

Nashik Jilha Mahila Sahakari Bank was penalised Rs50,000 for violating Section 26A (2) of the BR Act. RBI found that the Bank did not transfer the eligible amount to DEAF within the required period.

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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