RBI Slaps Rs4.50 Lakh Penalty on 3 Cooperative Banks from Maharashtra, 1 from Madhya Pradesh

Moneylife Digital Team 02 February 2024

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs4.50 lakh on three cooperative banks from Maharashtra and one from Madhya Pradesh for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs2 lakh has been imposed on Shirpur Peoples Cooperative Bank Ltd from Maharashtra.

Other banks fined by RBI are Amravati-based Janata Sahakari Bank Ltd and Nashik Zilha Sarkari & Parishad Karmachari Sahakari Bank Niyamit from Maharashtra, while Nagrik Sahakari Bank Maryadit is from Madhya Pradesh.

Shirpur Peoples Cooperative Bank was penalised for non-compliance with directions issued by RBI on exposure norms and statutory other restrictions- urban cooperative banks (UCBs) and board of directors-UCBs.

"The statutory inspection of the Bank with reference to its financial position as of 31 March 2022, and examination of the risk assessment report (RAR) and all correspondence related revealed that Shirpur Peoples Cooperative Bank had sanctioned loans to the firms in which director's relatives were interested, " RBI says.

Nashik Zilha Sarkari & Parishad Karmachari Sahakari Bank has been penalised Rs1 lakh for non-compliance with directions issued by RBI on know your customer (KYC). The Bank had not put in place a system of periodic review of risk categorisation of its customers, in non-compliance with directions issued by RBI.

Statutory inspection and examination of the inspection report (IR) and all correspondence revealed that Nagrik Sahakari Bank had breached the prudential inter-bank gross exposure limit and not undertaken periodic review of risk categorisation of its customers once in six months. RBI, therefore, imposed a penalty of Rs1 lakh on the Shivpuri, Madhya Pradesh-based bank.

Amravati, Maharashtra-based Janata Sahakari Bank was penalised Rs50,000 for contravention of Section 26A (2) of the Banking Regulation Act, 1949 (BR Act). The Bank had not transferred an eligible amount to the depositor education and awareness Fund (DEAF) within the due date.

RBI says its action against these four banks is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.

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