RBI Slaps Rs5.98 Crore Penalty on 3 Cooperative Banks for Regulatory Violations
Moneylife Digital Team 15 July 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs5.98 crore on three cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs5.93 crore has been imposed on Mehsana Urban Cooperative Bank Ltd from Gujarat.
 
Other banks penalised by RBI are: Jilla Sahakari Kendriya Bank Maryadit from Madhya Pradesh and Pusad Urban Co-operative Bank Ltd from Maharashtra.
 
Mehsana Urban Cooperative Bank incurred a penalty of Rs5,93,30,000 (five crore ninety three lakh thirty thousand rupees) for non-compliance with RBI directives. 
 
RBI statutory inspection revealed several issues with Mehsana Urban Cooperative Bank. 
 
The Bank sanctioned or renewed multiple credit facilities, both fund-based and non-fund-based, to companies or concerns where the directors or their relatives had interests, despite having been penalised for similar actions earlier. Additionally, the Bank failed to implement basic cyber security control measures and requirements as prescribed by the RBI's cyber security framework. It also did not classify credit facilities of certain borrowers as non-performing assets (NPAs), allotted multiple unique customer identification codes (UCICs) to many individual customers and made donations to trusts or institutions where its director held a position or had an interest.
 
Further, Pusad Urban Cooperative Bank Ltd was fined Rs2.50 lakh for contravening specific directions issued by RBI under the supervisory action framework (SAF) for primary UCBs. RBI found that the Bank had offered interest rates on deposits higher than those offered by the State Bank of India (SBI), thereby violating the SAF directions.
 
Madhya Pradesh-based Jilla Sahakari Kendriya Bank Maryadit was fined Rs2.50 lakh for violating Section 26A of the Banking Regulation Act (BR Act). RBI found that the Bank failed to transfer eligible amounts to the Depositor Education and Awareness Fund (DEAF) within the specified period.
 
RBI, however, clarifies that its action against these three banks is based on deficiencies in regulatory compliance and not intended to pronounce on the validity of any transaction or agreement entered into by the banks with their customers.
Comments
Harmonised Approach by Regulators and Auditors Can Remove Blind Spots in Risk Identification and Mitigation: RBI
Moneylife Digital Team 11 July 2024
As banks navigate an increasingly complex emerging landscape, a harmonised approach by the regulators and auditors can remove the blind spots in risk identification and mitigation, says M Rajeshwar Rao, deputy governor of Reserve Bank...
RBI Expands Permissible Remittances to IFSCs under Liberalised Scheme
Moneylife Digital Team 11 July 2024
Reserve Bank of India (RBI) has issued a series of updates regarding remittances to International Financial Services Centers (IFSCs) under the liberalised remittance scheme (LRS). This move signifies a step towards greater integration...
Amid Rising Fraud Risks, RBI Urges CFOs and Auditors to Strengthen Oversight of Internal Accounts
Moneylife Digital Team 11 July 2024
Highlighting the critical role of chief financial officers (CFOs) and statutory auditors (SAs) in ensuring financial integrity and transparency within their institutions, Reserve Bank of India (RBI) deputy governor Swaminathan J urged...
SEBI Imposes Rs9 lakh Penalty on Berkeley Securities for Multiple Regulatory Violations
Moneylife Digital Team 11 July 2024
Market regulator Securities and Exchange Board of India (SEBI) has imposed a fine of Rs9 lakh on Berkeley Securities Ltd for multiple regulatory violations, including misusing credit balance client funds, giving loans to related...
Free Helpline
Legal Credit
Feedback