RBI Slaps Rs8 Lakh Penalty on 3 Cooperative Banks from Maharashtra

Moneylife Digital Team 03 May 2024

Reserve Bank of India (RBI) has imposed a penalty of Rs8 lakh on three cooperative banks from Maharashtra for non-compliance with the directions issued by the banking regulator. A maximum penalty of Rs5 lakh has been imposed on Lokmangal Cooperative Bank Ltd.

The other cooperative banks penalised by RBI are Satara Sahakari Bank Ltd and Udgir Urban Cooperative Bank Ltd.

RBI has imposed a penalty of Rs5 lakh on Lokmangal Cooperative Bank for non-compliance with the directions on know your customers (KYC).

RBI's statutory inspection revealed that Lokmangal Cooperative Bank had not carried out a periodic review of the risk categorisation of accounts and had not carried out periodic updation of KYC as per the risk categorisation of the customers.

Satara Sahakari Bank was fined Rs2 lakh for non-compliance with certain provisions of section 12(2) of the Banking Regulation Act (BR Act) and directions issued by RBI on prudential norms on capital adequacy for primary urban cooperative banks (UCBs). RBI found that the charge of the Bank allowing refund of share capital to its members, despite its last assessed capital to risk-weighted assets ratio (CRAR) being below 9%, was sustained.

Further, Udgir Urban Cooperative Bank was penalised Rs1 lakh for non-compliance with the directions issued by RBI on exposure norms and statutory or other restrictions – UCBs and board of directors. RBI found that the charge of sanctioning or renewal of loans to a relative of the bank's director was sustained.

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.

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