RBI imposes monetary penalty on five co-operative banks. Details here

The Reserve Bank of India (RBI) has imposed monetary penalties on five co-operative banks for deficiencies in regulatory compliance. The co-operative banks that faced the central bank's action are Navsarjan Industrial Co-operative Bank Ltd, Mehsana Jilla Panchayat Karmachari Co-operative Bank Ltd, Halol Urban Co-operative Bank Ltd, Stambhadri Co-operative Urban Bank Ltd and Subramanianagar Co-operative Urban Bank Ltd.

The Reserve Bank imposed a monetary penalty of ₹7 lakh on the Navsarjan Industrial Co-operative Bank Ltd at Ankleshwar in Bharuch district of Gujarat for non-compliance with the directions issued by the RBI on ‘placement of deposits with other banks by primary (urban) co-operative banks, Reserve Bank of India (KYC) Directions, 2016 and contravention of certain norms of the Banking Regulation Act, 1949’.

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The apex bank said the Navsarjan Industrial Co-operative Bank had breached inter-bank gross and counterparty exposure limits and had not carried out a review of risk categorisation of accounts as per prescribed periodicity. The bank had not transferred the eligible amount to the Depositor Education and Awareness Fund, the RBI said.

The apex bank imposed a monetary penalty of ₹3 lakh on the Mehsana Jilla Panchayat Karmachari Co-operative Bank in Gujarat for non-compliance with the directions issued by the RBI on ‘placement of deposits with other banks by primary (urban) co-operative banks' and contravention of certain provisions of the Banking Regulation Act, 1949. 

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The RBI said the Mehsana Jilla Panchayat Karmachari Co-operative Bank had breached the prudential inter-bank counterparty exposure limit, and not transferred eligible amount to the Depositor Education and Awareness Fund.

The banking regulator imposed a monetary penalty of ₹2 lakh on the Halol Urban Co-operative Bank at Panchmahal in Gujarat for non-compliance with the directions issued by the RBI on ‘loans and advances to directors, relatives and firms/concerns in which they are interested’ and ‘placement of deposits with other banks by primary (urban) co-operative banks’.

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The RBI said the Halol Urban Co-operative Bank had sanctioned a loan where a relative of one of the directors of the bank stood as guarantor, and breached the prudential inter-bank counterparty exposure limit. The RBI further said the co-operative bank had not paid interest in matured term deposits from the date of maturity till the date of their repayment at the applicable rate.

The RBI imposed a monetary penalty of ₹50,000 on the Stambhadri Co-operative Urban Bank at Khammam in Telangana for non-compliance with the directions issued by the RBI on ‘loans and advances to directors, their relatives, and firms/concerns in which they are interested’. The Stambhadri Co-operative Urban Bank had extended loans to a director and directors’ relatives, the RBI said.

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The RBI imposed a monetary penalty of ₹25,000 on the Subramanianagar Co-operative Urban Bank at Salem in Tamil Nadu for non-compliance with the directions issued by the RBI on ‘loans and advances to directors, their relatives, and firms/concerns in which they are interested’. The Subramanianagar Co-operative Urban Bank had extended loans to a relative of a director, the RBI added.

These penalties have been imposed in the exercise of powers conferred on the RBI under certain provisions of the Banking Regulation Act, 1949, the banking regulator said.

The RBI further said the monetary penalties on the cooperative banks were based on deficiencies in regulatory compliance and were not intended to be pronounced upon the validity of any transaction or agreement entered into by the banks with its customers.