RBI Slaps Monetary Penalties on Cooperative Banks for Rule Violations

22 Aug 2023 , 11:40 AM

The Reserve Bank of India (RBI) announced on August 21 that it has levied monetary penalties on three cooperative banks for breaches of specific regulations. The three banks facing penalties are Walchand Nagar Sahakari Bank based in Pune, Dahanu Road Janata Co-operative Bank Ltd of Maharashtra, and Devika Urban Co-operative Bank Ltd in Jammu and Kashmir.

Devika Urban Co-operative Bank Ltd incurred a penalty of Rs 3 lakh. An RBI inspection unveiled that the bank had renewed the cash credit facility granted to a sole proprietorship, where the proprietor was the wife of the director’s brother. The bank was issued a notice to explain why a penalty should not be imposed for non-compliance with the given directions. After reviewing the bank’s response, the RBI concluded that the charge of non-compliance was justified, leading to the monetary penalty.

Dahanu Road Janata Co-operative Bank Ltd was penalized Rs 1 lakh for providing a donation against specific directions issued under RBI rules. After issuing a notice and considering the bank’s reply, additional submissions, and oral discussions during a personal hearing, the RBI deemed the charge of non-compliance with its directions valid, leading to the imposition of the monetary penalty.

Similarly, Walchand Nagar Sahakari Bank faced a penalty of Rs 4 lakh. The bank was found to have failed in assigning Unique Customer Identification Codes to individual customers and in conducting regular reviews of risk categorization of accounts. Following the issuance of a notice and assessing the bank’s response, the RBI concluded that the non-compliance charge was substantiated and justified the imposition of the monetary penalty.

These penalties emphasize the RBI’s commitment to upholding regulations within the cooperative banking sector and ensuring that institutions adhere to the prescribed guidelines.

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