RBI Imposes Fines on Five Co-operative Banks for Non-Compliance

The Reserve Bank has imposed fines on five co-operative banks due to lapses in regulatory compliance. The affected co-operative banks are Shri Mahila Sewa Sahakari Bank Ltd, Porbandar Vibhagiya Nagarik Sahkari Bank Ltd, Sarvodaya Nagarik Sahakari Bank Ltd, The Khambhat Nagarik Sahakari Bank Ltd, and The Vejalpur Nagarik Sahkari Bank Ltd.

Shri Mahila Sewa Sahakari Bank

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2.50 lakh on Shri Mahila Sewa Sahakari Bank Ltd., Ahmedabad. The penalty is a result of non-compliance with RBI directives on the 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)' and 'Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016'.

The central bank stated that Shri Mahila Sewa Sahakari Bank violated the recommended limit for exposure to other banks and neglected to pay interest on matured term deposits. The lapse included a failure to provide interest on term deposits for Sundays, holidays, and non-business working days when they matured, with repayment occurring on the subsequent working day, as outlined by the RBI.

Porbandar Vibhagiya Nagarik Sahkari Bank

Porbandar Vibhagiya Nagarik Sahkari Bank Ltd. has been fined ₹2.00 lakh by the RBI for non-compliance with directives on the 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)'. The bank exceeded the inter-bank counterparty exposure limit.

Sarvodaya Nagarik Sahakari Bank

Sarvodaya Nagarik Sahakari Bank Ltd. is facing a ₹1.00 lakh penalty for non-compliance with RBI directives on the 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)'. The bank breached the inter-bank counterparty exposure limit.

The Khambhat Nagarik Sahakari Bank

The RBI has imposed a monetary penalty of ₹50,000 on The Khambhat Nagarik Sahakari Bank Ltd. for non-compliance with directives on 'Loans and Advances to directors, relatives and firms/concerns in which they are interested' along with 'Loans and Advances to Directors, etc. - Directors as surety/guarantors – Clarification'. The bank sanctioned loans where a relative of one of the directors stood as a guarantor.

The Vejalpur Nagarik Sahkari Bank

The Vejalpur Nagarik Sahkari Bank Ltd. is facing a monetary penalty of ₹25,000 for non-compliance with RBI directives on the 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)'. The bank breached the inter-bank counterparty exposure limit.

Regulatory Perspective

These penalties have been levied by the RBI under the powers conferred by certain provisions of the Banking Regulation Act, of 1949. It is essential to note that these penalties are a result of deficiencies in regulatory compliance and do not question the validity of any transaction or agreement between the banks and their customers.

RBI Perivous penalties

On October 30, the Reserve Bank of India (RBI) imposed  monetary penalties on five cooperative banks for rule violations. The penalized banks are Uma Co-operative Bank, Birbhum District Central Co-operative Bank, Mizoram Co-operative Apex Bank, Shihori Nagarik Sahakari Bank, and Pij People’s Co-operative Bank.

The penalties are as follows:

•    Mizoram Co-operative Apex Bank and Pij People’s Co-operative Bank: Rs 2 lakh each
•    Birbhum District Central Co-operative Bank: Rs 1.10 lakh
•    Shihori Nagarik Sahakari Bank: Rs 1 lakh
•    Uma Co-operative Bank: Rs 7 lakh

Uma Co-operative Bank faced penalties for breaching inter-bank exposure limits, while Mizoram Co-operative Apex Bank exceeded the prescribed limit for housing finance exposure. Pij People’s Co-operative Bank was penalized for not conducting periodic reviews of risk categorization of accounts.