RBI Slaps Rs7 Lakh Penalty on 2 Gujarat-based Cooperative Banks
Moneylife Digital Team 17 May 2024
The Reserve Bank of India (RBI) has imposed a total penalty of Rs7 lakh on Gujarat-based Sutex Cooperative Bank Ltd and Bapunagar Mahila Cooperative Bank Ltd for failing to follow directions issued by the banking regulator on cyber security framework, levying charges on inoperative accounts and non-compliance with placement of deposits with other banks.
 
In a release, RBI says it imposed a penalty of Rs5 lakh on Surat-based Sutex Cooperative Bank for non-compliance with the directions on comprehensive cyber security framework for primary (urban) cooperative banks (UCBs) and levy of penal charges on non-maintenance of minimum balances in inoperative accounts. 
 
During a statutory inspection, RBI found that Sutex Cooperative Bank did not conduct vulnerability assessment (VA) and penetration testing (PT) of its internet-facing mobile application as per the prescribed periodicity and had levied penal charges for non-maintenance of minimum balances in inoperative accounts.
 
RBI imposed a penalty of Rs2 lakh on Ahmedabad-based Bapunagar Mahila Cooperative Bank for non-compliance with its directions on placement of deposits with other banks by primary UCBs’. 
 
After considering Bapunagar Mahila Cooperative Bank’s reply to the notice and oral submissions made by it during the personal hearing, RBI says the charge of breaching the prudential inter-bank (counterparty) exposure limit was sustained, warranting imposition of monetary penalty.
 
RBI, however, clarified that its action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by these banks with their customers. Further, the imposition of this monetary penalty is without prejudice to any other action that RBI may initiate against these entities.
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