The Reserve Bank of India has imposed monetary penalties on five banks on Friday for breaching the RBI rules and regulations. The total fine imposed is worth Rs 13 lakh and maximum fine was levied on Ahmedabad based Progressive Mercantile Cooperative Bank.
These banks are Shree Morbi Nagarik Sahakari Bank, Progressive Mercantile Cooperative Bank, Bhabhar Vibhag Nagarik Sahakari Bank, Kutch Mercantile Cooperative Bank and Thane District Central Cooperative Bank.
The Reserve Bank of India imposed a monetary penalty of Rs 7.00 lakh on Progressive Mercantile Co-operative Bank Limited, Ahmedabad, Gujarat for non-compliance with the directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’.
A monetary penalty of Rs 50,000 has been imposed on Shree Morbi Nagrik Sahakari Bank Limited, Morbi, Gujarat for non-compliance with the directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’.
Similarly, RBI imposed a monetary penalty of Rs 50,000 on Bhabhar Vibhag Nagarik Sahakari Bank Limited, Bhabhar, District Banaskantha, Gujarat for non-compliance with the directions issued by RBI on ‘Loans and advances to directors, relatives and firms/concerns in which they are interested’ read with RBI directions on ‘Loans and Advances to directors etc. – directors as surety/guarantors – Clarification’.
A monetary penalty of Rs 3.00 lakh has been imposed on the Kutch Mercantile Co-operative Bank Limited, Rapar, Dist. Kachchh, Gujarat for non-compliance with the directions issued by RBI on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Policy and Practice regarding Nominal Membership’ read with RBI directions on ‘Exposure Norms and Statutory/Other Restrictions- UCBs’.
Besides, the Reserve Bank of India imposed a monetary penalty of Rs 2.00 lakh on the Thane District Central Co-operative Bank Limited, Thane (the bank) for violation of Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act).
These penalties have been imposed in exercise of powers conferred on RBI under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the BR Act.
This action is based on deficiency in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, clarifies the RBI.
It bears recalling that in a written reply in Lok Sabha, Union Minister of State for Finance Bhagwat Karad had informed during Winter session that the RBI has imposed 176 penalties worth Rs 14.04 crore on cooperative banks during the 2022-23 financial year.
The Union Minister of State for Finance said that during the last nine years, fifty-seven banks were closed out of which 55 are cooperative banks and three banks including PMC Bank, Lakshmi Vilas Bank and Yes Bank were revived.
Besides, “On 13 December 2023, thirty-nine Urban Co-operative Banks (UCBs), including four in Karnataka, namely, Sri Guru Raghavendra Sahakara Bank Niyamitha, Shimsha Sahakara Bank Niyamitha, the Hiriyur Urban Co-operative Bank Ltd. and the National Cooperative Bank Ltd., have been issued directions under 35A of the Banking Regulation Act, 1949”.
“As on 31st March 2022, 14 urban cooperative banks were closed in which Malkapur Urban Cooperative Bank had the highest business mix of Rs 1,521 crore”, he added.