RBI Slaps Rs7 Lakh Penalty on 2 Gujarat-based Cooperative Banks
Moneylife Digital Team 28 January 2025
The Reserve Bank of India (RBI) has imposed a total penalty of Rs7 lakh on Gujarat-based Marketyard Commercial Cooperative Bank Ltd and Kheralu Nagrik Sahakari Bank Ltd for failing to follow directions issued by the banking regulator.
 
In a release, RBI has announced a penalty of Rs5.50 lakh on Marketyard Commercial Cooperative Bank for non-adherence to guidelines on donations and contributions for public or charitable purposes from the profits of urban cooperative banks (UCBs). The lender also breached rules regarding donations to trusts and institutions where directors or their relatives hold positions or have an interest. 
 
Additionally, Marketyard Commercial Cooperative Bank did not comply with norms related to loans and advances to directors, their relatives and firms, or associated concerns, nor did it follow know-your-customer (KYC) requirements.
 
Kheralu Nagrik Sahakari Bank was penalised Rs1.50 lakh for non-compliance with directions issued by RBI on investment by primary UCBs and KYC. The lender had breached the prescribed ceiling of total investments held under the held-to-maturity (HTM) category and failed to carry out periodic review of risk categorisation of certain accounts at least once in six months. 
 
"After considering the reply and oral submissions of both the banks during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," the central bank says.
 
In both cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered into with their customer.
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