RBI Imposes Over Rs14 Lakh Penalty on 4 Cooperative Banks from Maharashtra, 1 from Madhya Pradesh
Moneylife Digital Team 29 October 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs14.10 lakh on four cooperative banks from Maharashtra and one from Madhya Pradesh (MP) for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs7.50 lakh has been imposed on Maharashtra-based Vaijapur Merchants Cooperative Bank Ltd.
 
Other banks penalised by RBI are Gondia District Central Cooperative Bank Ltd, Prerna Nagari Sahakari Bank Ltd, Shri Shiveshwar Nagari Sahakari Bank Ltd from Maharashtra and Maa Sharda Mahila Nagrik Sahakari Bank Maryadit from Madhya Pradesh.
 
Vaijapur Merchants Cooperative Bank has been penalised for non-compliance with specific directions issued by RBI under the supervisory action framework (SAF) and with directions issued by RBI on know-your-customers (KYC) norms.
 
RBI’s statutory inspection revealed that Vaijapur Merchants Cooperative Bank donated to certain entities and offered higher interest rates on deposits (both new and renewed) than those offered by the State Bank of India (SBI), in violation of the directions under the SAF. Additionally, the Bank failed to implement a robust software system capable of generating alerts to help identify and report suspicious transactions effectively, RBI says.
 
Gondia District Central Cooperative Bank has been penalised Rs2.60 lakh for contravention of the provisions of section 20 of the Banking Regulation Act (BR Act) and non-compliance with directions issued by RBI on membership of credit information companies (CICs) by cooperative Banks. The Bank also sanctioned a loan to its director and failed to obtain the membership of three CICs.
 
RBI conducted a statutory inspection of Prerna Nagari Sahakari Bank regarding its financial position as of 31 March 2023. The inspection revealed that the Bank had sanctioned a loan to a firm in which a director's relative was interested, and the director also stood as a guarantor of the loan. As a result, RBI imposed a penalty of Rs2 lakh on Prerna Nagari Sahakari Bank.
 
Further, Shri Shiveshwar Nagari Sahakari Bank has been penalised Rs1 lakh for contravention of the provisions of section 26A of the BR Act. RBI found out that the Bank had failed to transfer eligible unclaimed deposit amounts to the depositor education and awareness fund (DEAF) within the prescribed period. 
 
Madhya Pradesh-based Maa Sharda Mahila Nagrik Sahakari Bank has been penalised Rs1 lakh for non-compliance with RBI directions on exposure norms and statutory other restrictions for urban cooperative banks (UCBs). The lender had breached the prudential inter-bank gross exposure limit as well as the prudential inter-bank counterparty exposure limit, RBI says.
 
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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