Though the news of RBI imposing fine on urban co-op banks is a regular feature, it’s rather rare that on the same day three of the banks from UCB fraternity were fined by the regulator.
Two urban co-op banks from West Bengal and one from Odisha were penalized by the RBI last week. They are Berhampur Co-operative Urban Bank Ltd. (Odisha), Boral Union Co-operative Bank (West Bengal) and Khatra People’s Co-operative Bank. (West Bengal).
Each of them was fined Rs two lakh according to a RBI press release. These banks were found guilty of contravention and non-compliance with the directions issued by RBI on “Exposure Norms and Statutory/Other Restrictions-UCBs.
The penalties have been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the banks to adhere to the aforesaid directions issued by RBI, reads RBI release.
This action 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, RBI clarifies.
The release adds that “The inspection of the banks conducted by RBI with reference to their financial position as on March 31, 2018 (The Berhampur Co-operative Urban Bank Ltd.) and March 31, 2019 (The Boral Union Co-operative Bank Ltd. and Khatra People’s Co-operative Bank Ltd.) revealed, inter alia, contravention of/ non-compliance with the directions issued by Reserve Bank of India (RBI) on “Exposure Norms and Statutory/Other Restrictions-UCBs”.
Based on the same, notices were issued to the banks advising them to show cause as to why penalty should not be imposed for contravention of / non-compliance with the directions.
The banks’ replies and additional submissions and, where personal hearing was availed of by the bank, the submissions made therein were considered, and RBI came to the conclusion that the aforesaid charges of contravention of / non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.