Last week has been bad for the urban cooperative banks as several of them were imposed with hefty penalty for violating RBI’s directions. Prominent among them are Babaji Date Mahila Sahakari Bank, Tamilnad Mercantile Bank and Nutan Nagarik Sahakari Bank.
RBI imposed a monetary penalty of Rs five lac on Babaji Date Mahila Sahakari Bank Limited, based in Yavatmal, Maharashtra. The UCB was found guilty of non-compliance with the directions issued by RBI on Income Recognition and Asset Classification (IRAC), Know Your Customer (KYC) and Frauds – Classification and Reporting.
The inspection report revealed the non-compliance with the directions issued by RBI. Based on the same, a Notice was issued to the bank. After considering the bank’s replies, RBI felt the need to impose fine.
Similarly, the RBI imposed a monetary penalty of ?1.00 crore on Tamilnad Mercantile Bank Ltd for non-compliance with certain provisions of directions issued by RBI on “Cyber Security Framework in Banks”.
It bears recall that the Tamilnad Mercantile Bank had reported a few cyber incidents to RBI in October 2019. Examination of the incident reports revealed non-compliance by the bank with RBI directions on “Cyber Security Framework in Banks” dated June 2, 2016.
RBI issued a notice of show-cause to the bank. After considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions, RBI decided to impose the fine.
The third bank to fall under RBI lens is Ahmadabad based Nutan Nagarik Sahakari Bank. RBI has imposed a monetary penalty of ?90 lakh on the UCB for non-compliance with directions on ‘Interest Rate on Deposits’, ‘Know Your Customer (KYC)’ and Circular on ‘Frauds Monitoring and Reporting Mechanism’.
The statutory inspection of the Nutan Nagarik Sahakari Bank conducted by the RBI with reference to the bank’s financial position as on March 31, 2019 which revealed non-compliance with aforesaid directions issued by RBI.
Penalized UCBs can, however, take solace from the fact that the Regulator has not spared any one. RBI imposed a monetary penalty of Rs 1 Crore (Rupees one Crore) on City Union Bank Limited for non-compliance with directions related to Educational Loan Scheme and Credit Flow to Agriculture, among others.