The Reserve Bank of India has imposed monetary penalties on four urban cooperative banks within a time-frame of two days. Pune based Seva Vikas Cooperative Bank tops the chart with RBI penalizing it with Rs 55 lacs.
In one stroke RBI has, by orders dated January 29, 2021 imposed monetary penalties on Konnagar Samabaya Bank of Hoogly and the Santragachi Co-operative Bank. The penalties were imposed due to the failure of the banks to adhere to the prudential limits on gross and counterparty inter-bank exposures contained in the aforesaid directions issued by RBI.
Taking note of the violations, 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 made in writing/during the personal hearing were considered, and RBI concluded that the aforesaid charges of contravention of/ non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.
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.
In another case, RBI on February 2, 2021, imposed a monetary penalty on the Kalpavruksha Co-operative Bank Limited for non-compliance with certain directions issued by RBI contained in the “Master Circular on Board of Directors-UCBs”.
The UCB was found guilty of non-compliance with the directions prohibiting grant of loans and advances to directors, or their relatives and the firms/concerns/companies in which they are interested.
A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for such non-compliance with the directions. After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI concluded that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.
In the fourth case RBI has, by an order dated February 02, 2021, imposed a monetary penalty of Rs 55 lakh on Seva Vikas Cooperative Bank Limited, Pune (the bank) for non-compliance with certain directions issued by RBI contained in the “Master Circular – Management of Advances -UCBs” and “Master Circular – Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs.”
The penalty has been imposed on the bank 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, (i) for not ensuring end use of funds lent (ii) non-adherence to IRAC norms and (iii) restructuring of loan accounts with retrospective effect on grounds not valid, revealed during a scrutiny of the bank conducted by RBI during 2019.
A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for such non-compliance with the aforesaid directions. After considering the bank’s reply to the notice, RBI concluded that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.
This action is based on the deficiencies 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.
