RBI Imposes Rs 7.25 Lakh Penalties On Five Cooperative Banks For Regulatory Violations

The Reserve Bank of India (RBI) has levied monetary penalties on five cooperative banks for various regulatory violations. The penalties totalling Rs 7.25 lakh were imposed following statutory inspections and findings of non-compliance with RBI directives. The Mahabaleshwar Urban Cooperative Bank Ltd., Nagarik Sahakari Bank Ltd., Krishna Sahakari Bank Ltd., Abasaheb Patil Rendal Sahakari Bank Ltd., and Sivagangai District Central Cooperative Bank Ltd. were all penalized for failing to adhere to prescribed regulatory limits and operational guidelines. The Mahabaleshwar Urban Cooperative Bank Ltd. incurred a penalty of Rs 2 lakh for sanctioning unsecured advances beyond regulatory limits and neglecting share linking to borrowings guidelines during loan approvals. The RBI's directives on 'Exposure Norms and Statutory / Other Restrictions – UCBs' provide that cooperative banks maintain prudent limits on their lending activities to manage risk effectively. The 'Prudential Norms on Capital Adequacy - UCBs' specify requirements for maintaining adequate capital to cover potential losses. Similarly, Nagarik Sahakari Bank Ltd. was fined Rs 2 lakh for improperly charging customers to activate inactive accounts. RBI directives on 'Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks' outline fair practices for handling customer accounts and transactions. Krishna Sahakari Bank Ltd. of Satara faced a penalty of Rs 2 lakh for exceeding prescribed limits on loans sanctioned to nominal members which violated RBI's directives on 'Exposure Norms and Statutory/Other Restrictions - UCBs'. Abasaheb Patil Rendal Sahakari Bank Ltd. was fined Rs 1 lakh for sanctioning new loans and advances with risk weights exceeding 100%. Supervisory Action Framework by RBI provides a framework for supervisory actions to address non-compliance and ensure that banks operate within safe and sound banking practices. Sivagangai District Central Cooperative Bank Ltd. received a penalty of Rs 25,000 for delays in reporting fraud incidents to the National Bank for Agriculture and Rural Development (NABARD). NABARD guidelines on 'Frauds - Guidelines for Classification, Reporting and Monitoring' mandate prompt reporting of frauds to ensure transparency and effective management of fraudulent activities within the cooperative banking sector. Click Here To Read/Download order

RBI Imposes Rs 7.25 Lakh Penalties On Five Cooperative Banks For Regulatory Violations

Rajesh Kumar

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