This week started with bad news for the urban cooperative banks as four of them across states were penalized by the Reserve Bank of India on various counts of non-adherence with its directions.
These banks are Nav Jeevan Co-operative Bank, Dhakuria Cooperative Bank, Palani Co-operative Urban Bank and Balangir District Central Cooperative Bank. Incidentally two private banks also came under RBI lens this week.
RBI imposed a monetary penalty of Rs 2.00 lakh on Nav Jeevan Co-operative Bank Ltd., Ulhasnagar for contravention of/non-compliance with the directions issued by RBI on Exposure Norms and Statutory / Other Restrictions – UCBs.
Another bank to fall under RBI lens was Balangir District Central Cooperative Bank Limited, Balangir. The Reserve Bank of India imposed a monetary penalty of Rs 1.00 lakh on the bank for non-adherence with the provisions of Section 9 of the Banking Regulation Act, 1949 and the directions issued by RBI in this regard (Disposal of Non-banking Assets).
The Reserve Bank of India also imposed a monetary penalty of Rs 2.00 lakh on the Dhakuria Cooperative Bank Limited, Kolkata, West Bengal. The UCB was faulted for non-adherence with the directions issued by RBI to Urban Cooperative Bank on (i) ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ and (ii) Know Your Customer (KYC) Direction.
The fourth bank penalized by the RBI was Palani Co-operative Urban Bank. The Reserve Bank of India imposed a monetary penalty of Rs 2.00 lakh on the UCB for violation of directions issued under Exposure Norms and Statutory / Other Restrictions – UCBs.
These penalties were imposed in exercise of powers vested in RBI under the provisions of the Banking Regulation Act, 1949 (AACS), considering the failure of the bank to adhere to the aforesaid directions issued by RBI.
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 its customers.
After considering the banks’ reply and oral submissions during the personal hearing, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalties.
Interestingly, two private banks also were penalized by the Reserve Bank of India this week. RBI imposed a monetary penalty of Rs 1 crore on IndusInd Bank Ltd for non-compliance with certain directions issued by RBI on ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’.
The Reserve Bank of India also imposed a monetary penalty of Rs 1,05,00,000/ on Kotak Mahindra Bank Limited.
