RBI Imposes Penalties on 2 Co-operative Banks for Non-compliance With its Directions
Moneylife Digital Team 16 June 2021
The Reserve Bank of India (RBI) has imposed monetary penalties totalling Rs11 lakh on Bijnor Urban Co-operative Bank Ltd and National Urban Co-operative Bank Ltd for contravention of certain norms.
A penalty of Rs6 lakh has been imposed on the Bijnor Urban Co-operative Bank, and Rs5 lakh on the Delhi-based National Urban Co-operative Bank. 
The inspection report of the Bijnor Urban Co-operative Bank based on its financial position as on 31 March 2019, revealed, inter alia, that the bank failed to adhere to the provisions related to prohibition on director related loans and issue of performance guarantee, the RBI says.
In another statement, the central bank says the inspection report of the National Urban Co-operative Bank based on its financial position as on 31 March 2019, revealed, inter alia, non-adherence or violation of specific directions issued to the bank by RBI under supervisory action framework (SAF).
RBI further said penalties have been imposed based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered by the two lenders with their customers.
Last week, RBI had imposed a penalty of Rs2 lakh on Surendranagar, Gujarat-based Dhrangadhra People's Co-operative Bank for non-compliance with certain norms. 
The RBI says the penalty has been imposed for non-compliance with RBI directions on 'placement of deposits with other banks by primary (urban) co-operative banks (UCBs)' and 'depositor education and awareness fund scheme 2014' (DEA Fund).
Giving details, the RBI said the statutory inspection of the bank conducted by it with reference to the bank's financial position as on 31 March 2018, and the inspection report thereto, revealed, inter alia, non-compliance with the directions. Subsequently, a notice was issued to the Dhrangadhra People's Co-operative Bank. 
"After considering the bank's reply to the notice and oral submissions made during the personal hearing, the RBI came to the conclusion that the aforesaid charges were substantiated and warranted imposition of monetary penalty," the RBI said.
Free Helpline
Legal Credit