RBI Imposes Penalty on 10 Cooperative Banks for Violating Rules, Regulations
Moneylife Digital Team 21 February 2023
Reserve Bank of India (RBI) has imposed monetary penalties from Rs50,000 to Rs4 lakh on 10 cooperative banks for non-compliance to various rules and regulations. The violations include the non-categorisation of customers based on risk profiles and failure to follow know-your-customer (KYC) norms. 
Banks which are penalised by RBI include Sudha Cooperative Urban Bank Ltd, Suryapet, Telangana, The Satara Sahakari Bank Ltd, Mumbai, Pune People’s Cooperative Bank Limited, Pune, Youth Development Cooperative Bank Limited, Kolhapur, The Jalgaon District Central Cooperative Bank Ltd, Jalgaon (Maharashtra), Jila Sahakari Kendriya Bank Maryadit, Bhind (Madhya Pradesh), Jila Sahakari Kendriya Bank Maryadit, Tikamgarh (Madhya Pradesh), Osmanabad Janata Sahakari Bank Ltd., Osmanabad (Maharashtra), The Vaijapur Merchants Cooperative Bank Ltd, Vaijapur (Maharashtra) and Shree Samarth Sahakari Bank Ltd, Nashik (Maharashtra).
Vaijapur Merchants Cooperative Bank and Satara Sahakari Bank are directed to pay a penalty of Rs4 lakh each. The inspection of RBI found that the Vaijapur Merchants Cooperative Bank had classified certain accounts as non-performing assets (NPA) as per income recognition and asset classification (IRAC) norms, while Satara Sahakari Bank did not have a proper mechanism for monitoring the end use of funds and had sanctioned unsecured advances above the permissible limits. 
Telangana-based Sudha Cooperative Urban Bank was found extending loans to directors, resorting to ever-greening of director-related loans, and breaching single-borrower exposure limits. A penalty of Rs2 lakh was imposed on the Bank by RBI. 
The inspection report of the Jalgaon District Central Cooperative Bank, based on its financial position till 31 March 2021, revealed that the Bank had not carried out risk categorisation of its customers. The Bank also failed to comply with directions issued by RBI on KYC. Jalgaon District Central Cooperative Bank was penalised Rs1.50 lakh. 
During its inspection, RBI found that Osmanabad Janata Sahakari Bank had not transferred eligible unclaimed deposits to the Depositor Education and Awareness Fund (DEAF). The lender was asked to pay Rs1.50 lakh as a penalty. 
The Pune People’s Cooperative Bank was found not paying interest on the balance amount lying in the current accounts of deceased individual depositors from the date of death of the depositor till the date of repayment to the claimants. The risk assessment report of Youth Development Cooperative Bank revealed that the bank performed a one-time settlement (OTS) scheme with the borrowers without prior written permission from RBI. The central bank imposed a penalty of Rs1 lakh each on these cooperative banks. 
RBI imposed a fine of Rs50,000 each on three cooperative banks, Tikamgarh-based Jila Sahakari Kendriya Bank, Bhind-based Jila Sahakari Kendriya Bank and Shree Samarth Sahakari Bank from Maharashtra. Jila Sahakari Kendriya Bank failed to complete the risk categorisation of its customers. Jila Sahakari Kendriya Bank from Bhind delayed submitting statutory returns to RBI, and OSS returns to NABARD. At the same time, Shree Samarth Sahakari Bank was found to have renewed a loan granted to the relative of its director.
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