RBI Imposes Rs2.25 Lakh Penalty on 3 Cooperative Banks for Non-compliance
Moneylife Digital Team 13 December 2024
Reserve Bank of India (RBI) has imposed a penalty of Rs2.25 lakh on three cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs1 lakh has been imposed on Pondicherry Cooperative Urban Bank Ltd.
 
Other banks penalised by RBI are Udumalpet Cooperative Urban Bank Ltd from Tamil Nadu and Mandya City Cooperative Bank Ltd from Karnataka.
 
Pondicherry Cooperative Urban Bank has been penalised for non-compliance with specific directions issued by RBI under supervisory action framework (SAF) and certain directions issued by RBI on know-your-customer (KYC).
 
RBI's statutory inspection found that the Pondicherry Cooperative Urban Bank had violated several guidelines. The lender sanctioned new loans and advances that exceeded the eligible single borrower exposure limit, without securing them with collateral such as term deposits, national savings certificate (NSCs), kisan vikas patra scheme (KVPs) or insurance policies. Additionally, it failed to upload the KYC records of some customers to the Central KYC Records Registry (CKYCR) within the required timeline.
 
Udumalpet Cooperative Urban Bank has been penalised Rs75,000 for non-compliance with directions issued by RBI on loans and advances to directors, their relatives and firms or concerns in which they are interested and exposure norms and statutory other restrictions –urban cooperative bank (UCBs). The lender had sanctioned a loan to the relative of bank’s director and sanctioned loans to nominal members more than the prescribed regulatory limit. 
 
Karnataka-based Mandya City Cooperative Bank has been fined Rs50,000 for non-compliance with certain directions issued by RBI on KYC. The lender failed to upload the KYC records of certain customers on to the CKYCR within the prescribed timeline.  
 
RBI says its action against these three 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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