Reserve Bank of India imposes monetary penalties on eight co-op banks

The sanctions were announced on 14 March

Eight co-operative banks have been fined by the Reserve Bank of India (RBI) for various regulatory violations.

RBI imposed a penalty of Rs 4 lakh (£4,020) on Nabapalli Cooperative Bank in Barasat, West Bengal, for not adhering to prudential inter-bank (gross) exposure limit and not complying with the prudential inter-bank counterparty limit.

Similarly, the Faiz Mercantile Co-operative Bank, Nasik, Maharashtra was asked to pay Rs 25,000 (£251) for granting loan to a relative of a director in contravention of/ non-compliance with the directions issued by RBI on Board of Directors.

Another bank fined was the Amravati Merchants’ Co-operative Bank, which was given a Rs 50,000 (£502) fine for delayed reporting of fraud in contravention of/ non-compliance with the directions issued by RBI on Frauds – Classification and Reporting.

The Manipur Women’s Cooperative Bank in Paona Bazar, Imphal, Manipur also faces a monetary penalty of Rs 2.00 lakh (£2,010) for not adhering to the prudential inter-bank (Gross) exposure limit and not complying with the prudential inter-bank Counter Party limit.

Another bank fined was United India Co-operative Bank in Nagina, UP, which was sanctioned with a monetary penalty of Rs 1.00 lakh (£1,005) for sanctioning an unsecured housing loan to a director and failing to adhere to the requirement of submission of return on connected lending.

RBI also imposed a monetary penalty of Rs 3.00 lakh (£3,015) on the Baghat Urban Co-operative Bank Limited, Solan, HP for its violation of specific directions issued under the Supervisory Action Framework (SAF).

Similarly, RBI enforced a monetary penalty of Rs 1.00 lakh (£1,005) on the Navnirman Co-operative Bank, Ahmedabad (Gujarat) for sanctioning a loan to a relative of one of its directors and granting loans for which relatives of its directors stood as the surety/guarantors, resulting in contravention of aforesaid directions issued by RBI.

Jila Sahakari Kendriya Bank in Maryadit, Narsinghpur was also sanctioned with monetary penalty of Rs 1.00 lakh (£1,005) for failing to transfer eligible unclaimed deposits to the Depositor Education and Awareness Fund in contravention of/ non-compliance with the provisions under Section 26-A of the Act and the Scheme.

Urban co-operative banks in India were brought under the supervision of the RBI in 2020. The RBI has the power to audit urban co-operative banks, give its consent for the appointment of their chief executives and approve mergers when co-operative banks are deemed to be too weak to survive on their own.

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