The Reserve Bank of India imposed penalties on four cooperative banks of Gujarat and extended direction validity on the Mumbai based City Cooperative Bank till 16th January 2024 on Monday. And last week it had imposed a penalty on three urban cooperative banks and issued fresh directions on Mahabhairab Cooperative Urban Bank, Tezpur on Thursday.
On Monday, the RBI release named four banks including Gujarat Mercantile Cooperative Bank, Makarpura Industrial Estate Cooperative Bank, Sevalia Urban Cooperative Bank and Nagarik Sahakari Bank.
RBI has imposed a monetary penalty of Rs 4.50 lakh on Gujarat Mercantile Co-operative Bank Ltd., 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)’ and ‘Maintenance of Cash Reserve Ratio (CRR)’.
A monetary penalty of Rs 2.00 lakh has been imposed on Makarpura Industrial Estate Co-operative Bank Ltd., Dist. Vadodara, Gujarat for contravention of Section 26A (2) of the Banking Regulation Act, 1949 (BR Act) and RBI directions on ‘Loans and advances to directors, relatives, firms/concerns in which they are interested’.
Besides, the RBI has imposed a monetary penalty of Rs 50,000 on The Sevalia Urban Co-operative Bank Ltd., Sevalia, dist. Kheda, Gujarat for non-compliance of directions issued by RBI on ‘Loans and Advances to directors, relatives and firms/concerns in which they are Interested’ read with ‘Loans and Advances to Directors etc. – Directors as surety/guarantors – Clarification’.
Similarly, a monetary penalty of Rs 2.00 lakh has been imposed on Nagarik Sahakari Bank Ltd., Babra, Gujarat for contravention of Section 26 A (2) of the Banking Regulation Act, 1949 (BR Act) and RBI directions on ‘Loans and advances to directors, relatives, firms/concerns in which they are interested’, ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ and ‘Co-operative Banks – Interest Rate on Deposits’.
In the release last Thursday, RBI listed the names of three urban cooperative banks and issued fresh directions on Mahabhairab Cooperative Urban Bank, Tezpur. The banks on which RBI imposed penalty included Annasaheb Magar Sahakari Bank, Jawhar Urban Cooperative Bank and Janata Urban Cooperative Bank.
RBI issued certain Directions to the Mahabhairab Co-operative Urban Bank Ltd., Tezpur, whereby, as from the close of business on October 12, 2023, 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. These Directions shall remain in force for a period of six months from the close of business on October 12, 2023 and are subject to review.
RBI imposed a monetary penalty of Rs 4.00 lakh on Annasaheb Magar Sahakari Bank Ltd., Pune, Maharashtra for non-compliance with certain provisions of RBI directions on ‘Know Your Customer (KYC) Direction, 2016’, ‘Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks’, and ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’.
Besides, a monetary penalty of Rs 1.00 lakh has been imposed on the Jawhar Urban Co-operative Bank Limited, Palghar, Maharashtra for non-compliance with the directions issued by RBI on ‘Know Your Customer (KYC)’.
Similarly, RBI imposed a monetary penalty of Rs 1.00 lakh on Janata Urban Co-operative Bank Limited, Wai, Maharashtra (the bank) for non-compliance with the directions issued by RBI on ‘Frauds Monitoring and Reporting Mechanism’.
These actions are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
RBI’s fine restricts UCBs from many activities and could be throttling for their businesses, say many experts including D Krishna, former CE of NAFCUB. Krishna raised the issue before Union Minister Amit Shah recently during an event in Delhi.