RBI Slaps Rs3.75 Lakh Penalty on 5 Cooperative Banks from Tamil Nadu
Moneylife Digital Team 14 January 2025
Reserve Bank of India (RBI) has imposed penalties of Rs3.75 lakh on five cooperative banks from Tamil Nadu for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs2 lakh has been imposed on Kamaraj Cooperative Town Bank Ltd.
 
The other cooperative banks penalised are: Arcot Cooperative Urban Bank Ltd, Cordite Factory Cooperative Bank Ltd, Tamilnadu Circle Postal Cooperative Bank Ltd and Virudhunagar Cooperative Urban Bank Ltd.
 
Kamaraj Cooperative Town Bank has been penalised for non-compliance with specific directions issued by RBI under the supervisory action framework (SAF), prudential norms on capital adequacy - urban cooperative banks (UCBs) and know-your-customer (KYC). 
 
RBI statutory inspection revealed several irregularities by Kamaraj Cooperative Town Bank. The lender sanctioned loans exceeding the eligible single-borrower exposure limit and issued fresh loans and advances with risk weights above 100%, in violation of directions under the SAF. Furthermore, it sanctioned certain loans without complying with the share-linking-to-borrowing norms, even though its capital-to-risk-weighted assets ratio (CRAR) was below the regulatory minimum.  
 
In addition, Kamaraj Cooperative Town Bank refunded share capital to its members, despite its CRAR being below the required threshold. It also failed to upload customers' KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeline. 
 
Three lenders, namely, Cordite Factory Cooperative Bank, Tamil Nadu Circle Postal Cooperative Bank and Virudhunagar Cooperative Urban Bank have each been fined Rs50,000 for failing to comply with RBI's KYC directions. Additionally, Arcot Cooperative Urban Bank has been penalised Rs25,000 for a similar violation. These lenders failed to upload their customers' KYC records to the CKYCR within the mandated timeframe.
 
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.
Comments
Array
Free Helpline
Legal Credit
Feedback