The Reserve Bank of India (RBI) has taken a firm stance on maintaining regulatory integrity within the cooperative banking sector by imposing monetary penalties on four cooperative banks. Among them, two are from Bihar and the other two from Maharashtra. These penalties have been levied due to the banks’ failure to adhere to various regulatory directives, highlighting the importance of stringent compliance with banking regulations.
The first of the banks, Tapindu Urban Co-operative Bank Limited in Patna, Bihar, has been fined ₹1,00,000 for its non-compliance with RBI’s directions on ‘Exposure Norms and Statutory / Other Restrictions – UCBs’. The bank did not adhere to RBI’s prudential inter-bank exposure norms at the gross level, leading to the imposition of the penalty.
The second cooperative bank, Islampur Urban Co-operative Bank Limited in Maharashtra, faced a penalty of ₹2,00,000 for its non-compliance with certain provisions of the Banking Regulation Act, 1949, and specific provisions of the ‘Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016’ and ‘Maintenance of Deposit Accounts-UCBs’. The bank was found to be deficient in transferring the eligible amount to the Depositor Education and Awareness Fund (DEAF), as well as failing to conduct periodic reviews of risk categorization of customers and annual reviews of inoperative accounts.
In Maharashtra, the Mahabaleshwar Urban Co-operative Bank Limited also incurred a ₹2,00,000 penalty for its contravention of the Banking Regulation Act, 1949 (BR Act), RBI’s specific directions under the Supervisory Action Framework (SAF), and directives related to ‘Maintenance of Deposit Accounts’ and ‘Know Your Customer (KYC)’. The bank granted interest relief to an ex-director’s loan account, sanctioned new loans, and renewed credit limits for borrowers in defiance of SAF restrictions. Furthermore, it failed to conduct annual reviews of inoperative accounts and periodic reviews of risk categorization for customers.
Lastly, Mangal Co-operative Bank Limited in Mumbai was subjected to ₹1,00,000 monetary penalties by RBI for non-compliance with directives concerning ‘Maintenance of Deposit Accounts’ and ‘Know Your Customer (KYC)’. The bank failed to conduct annual reviews of inoperative accounts and periodic reviews of risk categorization for its existing customers.
It’s important to note that the RBI’s actions are centered around the deficiencies in regulatory compliance and are not intended to cast judgment on the validity of any transactions or agreements between the banks and their customers. These penalties serve as a reminder to the cooperative banking sector to uphold the highest standards of regulatory adherence and protect the interests of both institutions and their customers.
