A spate of urban co-op banks was either put under restriction or imposed with fine for various acts of omissions and commissions last week. At least six banks were put under Directions and four others were penalized.
Reviewing performance of some co-op banks, the apex body RBI put Direction on six of them including Durga Co-operative Urban Bank, Jaiprakash Narayan Nagari Sahakari Bank, Karmala Urban Co-operative Bank, Anjangaon Surji Nagari Sahakari Bank, Lucknow Urban Co-operative Bank and Urban Co-operative Bank Limited, Sitapur.
The Reserve Bank of India imposed penalties on four UCBs on Thursday due to various acts of omission and commissions done by these UCBs. Their names are Mangaldai Nagar Samabai Bank, Moirang Primary Co-operative Bank, Tura Urban Co-operative Bank and Gauhati Co-operative Urban Bank
Durga Co-operative Urban Bank Ltd., Vijayawada was put under Direction whereby, as from the close of business on July 29, 2022, the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, disburse or agree to disburse any payment, etc.
Second bank in which RBI imposed restriction was Jaiprakash Narayan Nagari Sahakari Bank Ltd., Basmatnagar, whereby, as from the close of business on July 29, 2022, the bank shall not do many activities.
The Karmala Urban Co-operative Bank Ltd., Solapur was also put under Direction, whereby, as from the close of business on July 29, 2022, the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, etc.
RBI has also issued certain Directions to Anjangaon Surji Nagari Sahakari Bank Ltd., Amravati (“the bank”), whereby, as from the close of business on July 28, 2022, the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, etc.
Fifth bank where RBI issued certain Directions was Lucknow Urban Co-operative Bank Limited, Lucknow (U.P.), whereby, as from the close of business on July 28, 2022, the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, make any investment, incur any liability including borrowal of funds and acceptance of fresh deposits, etc.
RBI also issued certain Directions to Urban Co-operative Bank Limited, Sitapur (“the bank”), whereby, as from the close of business on July 28, 2022, the bank shall not, without prior approval of RBI in writing grant or renew any loans and advances, etc.
Clarifying RBI said the issue of the above Directions by the RBI should not per se be construed as cancellation of banking license by RBI. The bank will continue to undertake banking business with restrictions till its financial position improves. The Reserve Bank may consider modifications of these Directions depending upon circumstances.
These Directions shall remain in force for a period of six months from the close of business on July 28, 2022 and are subject to review, RBI added.
Coming to penalties the Reserve Bank of India imposed penalties on four UCBs on Thursday due to various acts of omission and commissions done by these UCBs. Their names are Mangaldai Nagar Samabai Bank, Moirang Primary Co-operative Bank, Tura Urban Co-operative Bank and Gauhati Co-operative Urban Bank
RBI imposed a monetary penalty of ?50,000 (on Mangaldai Nagar Samabai Bank Limited for non-compliance with Know Your Customer (KYC) directions, 2016 issued by RBI.
A Scrutiny of the bank in the matter of exchange of Specified Bank Notes, revealed, inter alia, non-compliance with above mentioned directions issued by RBI.
Another UCB penalized by the RBI was Moirang Primary Co-operative Bank. RBI imposed a monetary penalty of ?1.00 lakh on it for non-compliance with Know Your Customer (KYC) directions, 2016 issued by RBI.
Third UCB which was penalized was Tura Urban Co-operative Bank Ltd. It was slapped with a monetary penalty of ?50,000 for non-compliance with Know Your Customer (KYC) directions, 2016 issued by RBI.
The Guwahati Co-operative Urban Bank was the fourth UCB which was slapped with a penalty of ?50,000 for non-compliance with Know Your Customer (KYC) directions, 2016 issued by RBI.
The 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 bank with its customers, clarified RBI in all the four cases.