Reserve Bank of India (RBI) has imposed a penalty of Rs8.35 lakh on five cooperative banks, including four from Gujarat and one from Odisha, for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs3 lakh has been imposed on Odisha-based Sundargarh District Central Cooperative Bank Ltd.
Other banks penalised by RBI are Gujarat-based Amod Nagric Cooperative Bank Ltd, Karjan Nagarik Sahakari Bank Ltd, Rajula Nagrik Sahakari Bank Ltd and Vijay Commercial Cooperative Bank Ltd.
Sundargarh District Central Cooperative Bank has been penalised for contravention of provisions of sections 20 and 26A of the Banking Regulation Act (BR Act) and non-compliance with directions issued by RBI on know-your-customer (KYC) norms.
RBI's statutory inspection of Sundargarh District Central Cooperative Bank revealed that the lender had sanctioned certain loans to its directors, not transferred the eligible unclaimed amounts to the depositor education and awareness fund (DEAF) and failed to follow customer due diligence procedure at the time of opening of certain new accounts.
Vadodara, Gujarat-based Karjan Nagarik Sahakari Bank has been fined Rs2.10 lakh for violating provisions of sections 18 and 26A of the BR Act and for failing to comply with RBI directives. These violations included issues related to the membership of credit information companies (CICs) by cooperative banks, the placement of deposits with other banks by primary urban cooperative banks (UCBs) and adherence to KYC norms.
Karjan Nagarik Sahakari Bank failed to transfer eligible unclaimed amounts to the DEAF within the prescribed time, maintain the minimum cash reserve ratio (CRR) for certain days during the FY21-22, and submit credit information of its borrowers to any of the four CICs as of 31 March 2023. Karjan Nagarik Sahakari Bank also did not adhere to the prudential inter-bank counterparty exposure limit. It failed to carry out risk-based periodic updates of KYC for some customers as per the prescribed schedule.
Rajula Nagrik Sahakari Bank has been penalised Rs1.25 lakh for non-compliance with directions issued by RBI on loans and advances to directors, relatives, and firms or concerns in which they are interested, as well as maintenance of deposit accounts primary UCBs. The lender had sanctioned cash credit limits, wherein relatives of the Rajula Nagrik Sahakari Bank's directors stood as guarantors and failed to classify certain accounts as inoperative or dormant where no customer-induced transaction occurred for a period of over two years.
Vijay Commercial Cooperative Bank has been penalised Rs1 lakh for non-compliance with certain directions issued by RBI on KYC norms. The lender had failed to carry out a periodic review of risk categorisation of certain accounts at least once in six months.
Further, Amod Nagric Cooperative Bank Ltd was also fined Rs1 lakh for failing to comply with RBI's guidelines on loans and advances to directors, their relatives, and firms or entities they are connected to, as well as on KYC norms. RBI discovered that the bank had approved loans to a relative of one of its directors, and in another case, the director's relative acted as a guarantor.
Additionally, Amod Nagric Cooperative Bank failed to upload the KYC records of some customer accounts to the central KYC registry within the required timeline.
RBI says its action against these five cooperative banks is based on deficiencies in regulatory compliance and is not intended to pronounce on the validity of any transaction or agreement entered into by the banks with their customers.
