RBI imposed Monetary Penalty of 26.4 Lakhs on 4 Cooperative Banks; Know Reason Why?

The Reserve Bank of India (RBI) has imposed Monetary Penalty of Rs.26,40,000 on 4 Cooperative Bank for non-compliance with the directions issued by RBI.

These Banks are Ambarnath Jaihind Co-operative Bank Ltd., The Bantra Co-operative Bank Ltd., National Urban Co-operative Bank Limited, The Sutex Co-operative Bank Ltd. and The Jamnagar District Co-operative Bank Limited.

RBI has imposed a monetary penalty of Rs.2.00 lakh on Ambarnath Jaihind Co-operative Bank Ltd., Ambarnath(Maharashtra) (the bank) for non-compliance with the directions issued by RBI on ‘Know Your Customers’. This penalty has been imposed in exercise of powers vested in RBI conferred under section 47 A (1) (c) read with sections 46 (4) (i) and 56 of Banking Regulation Act, 1949 (BR Act), by an order dated April 26, 2023. This action is based on the 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.

Monetary penalty of Rs.30,000 has been imposed on The Bantra Co-operative Bank Ltd., Howrah, West Bengal (the bank) for contravention of RBI directions to Urban Cooperative Banks on (i) ‘Exposure Norms and Statutory / Other Restrictions – UCBs’ and (ii) Know Your Customer (KYC) Directions, 2016. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI. This action is based on regulatory compliance problems and is not intended to call into question the legitimacy of any transaction or agreement entered into by the bank with its clients.

Imposition of Monetary penalty of Rs.10.00 lakh on the National Urban Co-operative Bank Limited, Pratapgarh (UP)(the bank) for contravention of section 35A and section 36 (1) (a) read with section 56 of the Banking Regulation Act, 1949. This penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47 A (1) (c) read with section 46 (4) (i) and section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to specific directions issued by RBI.

The Sutex Co-operative Bank Ltd., Surat (Gujarat) (the bank) for contravention of directions issued by RBI on ‘Loans and advances to directors, relatives and firms / concerns in which they are interested’ and ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’ is levied by monetary penalty of Rs.10 Lakh.

The Jamnagar District Co-operative Bank Limited (Gujarat) (the bank) was fined with Rs.4.10 lakh as a monetary penalty for contravention of / non-compliance with section 26 A (2) of the Banking Regulation Act, 1949 (the Act) read with paragraph 3 of The Depositor Education and Awareness Fund Scheme, 2014 (the scheme) enclosed with Circular on ‘The Depositor Education and Awareness Fund Scheme, 2014 – Section 26 A of Banking Regulation Act, 1949 – Operational Guidelines’ dated May 27, 2014, the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016, and provisions of the Credit Information Companies (Regulation) Act, 2005 (CIC Act) and RBI directions on ‘Membership of Credit Information Companies by Co-operative Banks’.