RBI Imposes Over Rs10 Lakh Penalty on 4 Cooperative Banks from Maharashtra, 1 from Odisha
Moneylife Digital Team 08 October 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs10.10 lakh on four cooperative banks from Maharashtra 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 Maharashtra-based Muslim Cooperative Bank Ltd.
 
Other banks penalised by RBI are: Sindhudurg District Central Cooperative Bank Ltd, Kolhapur Urban Cooperative Bank Ltd and Koyana Sahakari Bank Ltd from Maharashtra and Nabapalli Cooperative Bank Ltd from Odisha.
 
Muslim Cooperative Bank has been penalised for non-compliance with directions issued by RBI on maintenance of deposit accounts –primary urban cooperative banks (UCBs.) 
 
RBI's statutory inspection revealed that Muslim Cooperative Bank had failed to carry out an annual review of accounts in which there were no operations for more than one year and failed to notify its customers about the imposition of penal charges for not maintaining the minimum balance and levied penal charges at a flat rate for shortfall in maintenance of average minimum balance in the savings accounts.
 
Sindhudurg District Central Cooperative Bank has been penalised Rs2 lakh for violating Section 20 of the Banking Regulation Act (BR Act). RBI found that the Bank improperly sanctioned loans to its directors, confirming the charge against it.
 
Further, Kolhapur Urban Cooperative Bank has been penalised Rs2 lakh for failing to comply with directions issued by RBI on loans and advances to directors, their relatives and firms or concerns in which they have an interest. RBI found that the Bank had improperly sanctioned loans related to its directors.
 
RBI conducted a statutory inspection of Koyana Sahakari Bank regarding its financial position as of 31 March 2023. The inspection revealed that the Bank failed to classify certain loan accounts as non-performing assets (NPAs) according to the required income recognition, asset classification and provisioning norms. As a result, RBI imposed a penalty of Rs2 lakh on Koyana Sahakari Bank.
 
Nabapalli Cooperative Bank has been fined Rs1.10 lakh for failing to comply with RBI's directions regarding contributions to the micro and small enterprises (MSE) refinance fund. The fine was imposed because the Bank did not meet its priority sector lending (PSL) targets.
 
RBI found that Nabapalli Cooperative Bank had failed to deposit the required amount into the MSE refinance fund, maintained with Small Industries Development Bank of India (SIDBI), for the shortfall in PSL targets for the FY22-23. This lapse occurred even after the RBI had issued a cautionary letter.
 
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.
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