Reserve Bank of India (RBI) has imposed a penalty of Rs67.05 lakh on four cooperative banks and one non-banking financial company (NBFC) for deficiencies in regulatory compliance. Of the four banks penalised, two belong to Maharashtra, while the remaining two are from Gujarat and Tamil Nadu. The NBFC penalised is from Kolkata. RBI has levied a fine of Rs48.30 lakh, the maximum among the five entities, on Maharashtra-based The Nasik Merchant's Cooperative Bank Ltd.
Other banks penalised by RBI are Mehsana Urban Cooperative Bank Ltd from Gujarat, Sangli Sahakari Bank Limited from Maharashtra and Pudukkottai Cooperative Town Bank Ltd from Tamil Nadu. The NBFC penalised is Sappers Finance and Consultancy Pvt Ltd from Kolkata.
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 RBI directions were substantiated and warranted imposition of monetary penalty."
RBI imposed a penalty of Rs48.30 lakh on Nasik Merchant's Cooperative Bank for non-compliance with the directions issued by the central bank on frauds in urban cooperative banks (UCBs), changes in monitoring and reporting mechanisms and on maintenance of deposit accounts.
The statutory inspection of the Bank conducted by RBI with reference to its financial position as of 31 March 2021, and examination of the risk assessment report (RAR), inspection report (IR) and all correspondence related revealed that Nasik Merchant's Cooperative Bank had reported fraud cases with delay and levied penal charges for non-maintenance of minimum balances in dormant or inoperative savings bank (SB) accounts. The Bank also imposed punitive charges for non-maintenance of minimum balances in SB accounts without notifying the customers.
The Mehsana Urban Cooperative Bank was finned Rs15 Lakh for non-compliance with the directions issued by RBI on interest rates on deposits. The Bank had opened SB accounts of ineligible trusts, whose entire income was not exempted from payment of income tax under the Income-tax Act.
A penalty of Rs2 Lakh and Rs25,000 was imposed on Sangli Sahakari Bank and Pudukkottai Cooperative Town Bank, respectively, for non-compliance with the directions issued by RBI on board of directors-UCBs. The IR, RAR and all correspondence revealed that Sangli Sahakari Bank renewed a loan given to a relative of one of its directors, while Pudukkottai Cooperative Town Bank extended loans to its directors.
The central bank has imposed a penalty of Rs1.50 lakh on Sappers Finance and Consultancy, an NBFC from Kolkata, for non-compliance with the directions on the requirement for obtaining prior approval of the central bank in cases of acquisition or transfer of control of NBFCs and NBFC returns directions, and format of statutory auditors certificate (SAC) to be submitted by NBFCs. A reference was received at RBI, and an examination revealed that the company had failed to obtain prior approval from the regulator for a change of management and failed to submit applicable returns and the statutory auditor's certificate to the central bank.
In all five cases, RBI said penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced upon the validity of any transaction or agreement they entered into with their customers.