On Thursday, the Reserve Bank of India imposed fines totalling Rs 13.50 lakh on five urban cooperative banks for violating various RBI norms. All the banks are, incidentally, based in Gujarat.
The penalized banks include Bhuj Commercial Cooperative Bank, Sankheda Nagarik Sahakari Bank, Limdi Urban Cooperative Bank, Shree Bharat Cooperative Bank, and The Cooperative Urban Bank, Paralakhemundi.
The Bhuj Commercial Co-operative Bank Limited, located in Dist. Kachchh, Gujarat, received a monetary penalty of Rs 1.50 lakh for non-compliance with RBI’s directives on ‘Know Your Customer (KYC) Direction, 2016,’ and ‘Reserve Bank of India (Co-operative Banks – Interest Rate on Deposits) Directions, 2016.’
Sankheda Nagarik Sahakari Bank Limited, situated in Sankheda, Dist. Chhotaudepur, Gujarat, faced a penalty of Rs 5.00 lakh for violating RBI directives regarding ‘Loans and advances to directors, relatives, and firms/concerns in which they are interested,’ along with related guidelines on ‘Loans and Advances to directors etc. – directors as surety/guarantors – Clarification’ and ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs).’
The Limdi Urban Co-operative Bank Limited, based in Limdi, Dist. Dahod, Gujarat, incurred a penalty of Rs 50,000 for non-compliance with RBI’s guidelines on ‘Reserve Bank of India (Co-operative Banks – Interest Rate on Deposits) Directions, 2016.’
Shree Bharat Co-operative Bank Limited, located in Vadodara, Gujarat, received a monetary penalty of Rs 5.00 lakh for breaching RBI directives on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Reserve Bank of India (Co-operative Banks – Interest Rate on Deposits) Directions, 2016.’
The Co-operative Urban Bank Limited, Parlakhemundi, faced a penalty of Rs 1.50 lakh for non-compliance with RBI’s directives on ‘Membership of Credit Information Companies (CICs)’ and ‘Exposure Norms and Statutory/Other Restrictions – UCBs.’
RBI exercised its powers under Section 25(1)(iii) read with Section 23(4) of the Credit Information Companies (Regulation) Act, 2005 (CIC Act), and Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 (BR Act) to impose these penalties.
RBI clarified “It’s important to note that these actions are based on regulatory compliance deficiencies and do not pass judgment on the validity of any transactions or agreements between the banks and their customers.”