RBI Imposes Rs20 Lakh Penalty on 4 Cooperative Banks
Moneylife Digital Team 22 September 2023
Reserve Bank of India (RBI) has imposed Rs20 lakh penalties on four cooperative banks for violating rules and regulations prescribed by the regulator. Of these, two banks are from Maharashtra, while others belong to Uttar Pradesh (UP) and Jammu. RBI has levied a fine of Rs11 lakh, the highest among the banks, on HCBL Cooperative Bank Ltd from UP.
 
Other banks penalised by RBI are State Transport Cooperative Bank Ltd and Shree Warana Sahakari Bank Ltd from Maharashtra, and Citizens' Cooperative Bank Ltd from Jammu.
 
The central Bank says, "After considering the reply and oral submissions of all banks during the personal hearing, RBI concluded that the charges of non-compliance with its directions were substantiated and warranted imposition of monetary penalty."
 
HCBL Cooperative Bank has been penalised Rs11 Lakh for non-compliance with the directions issued by RBI on loans and advances to directors, relatives and firms concerns in which they are interested and specific directions issued by RBI under the supervisory action framework (SAF).
 
An inspection report of the Bank based on its financial position as on 31 March 2021 and an examination of the risk assessment report (RAR) revealed that HCBL Cooperative Bank had granted loans or advances to its director and their relatives. The Bank also sanctioned fresh loans and advances to single borrowers in excess of 50% of applicable regularity limits. It also offered interest rates on deposits more than those provided by State Bank of India (SBI), violating specific directions issued by RBI under SAF.
 
RBI imposed a penalty of Rs6 lakh on Citizens' Cooperative Bank for non-compliance with the specific directions issued by RBI under SAF and directions issued under exposure norms and statutory or other restrictions on urban cooperative banks (UCBs). The inspection report about its financial position revealed that the Bank had sanctioned fresh loans and advances and allowed cash credit facilities to be overdrawn in violation of specific directions issued under SAF, and breached prudential inter-bank (gross) exposure limit and inter-bank counterparty limit.
 
Further, Mumbai-based State Transport Cooperative Bank was fined Rs1 lakh for non-compliance with the directions issued by RBI on the depositor education and awareness fund (DEAF) scheme. The RAR and all related correspondence revealed that the Bank had failed to transfer amounts which were eligible for transfer to DEA Fund.
 
Shree Warana Sahakari Bank has been penalised Rs1 Lakh for non-compliance with the directions issued by RBI on maintenance of deposit accounts- primary UCBs. An inspection report of the Bank based on its financial position as of 31 March 2022 revealed that Shree Warana Sahakari Bank was collecting a fixed penalty for the shortfall in maintenance of minimum balance in the savings bank accounts instead of proportionate to the extent of the shortfall.
 
According to RBI, the penalty is based on deficiencies in regulatory compliance and is not intended to be pronounced upon the validity of any transaction or agreement entered by the company with its customers.
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