The Reserve Bank of India (RBI) has imposed monetary penalties on six cooperative banks over various rule violations. The banks are Kolkata Police Co-operative Bank Ltd, Mehsana District Central Co-operative Bank, Vyapari Sahakari Bank Maryadit, Ganesh Sahakari Bank Ltd, Delhi Nagrik Sehkari Bank Limited and Aligarh Zila Sahkari Bank Ltd.
The violations include granting unsecured loans to directors, non-compliance relating to interest rates on deposits, failure to report suspicious transactions, donations in excess of the permissible limits, and failure to adhere to risk management and KYC norms.
Following RBI inspections, the banks were served notices on March 27 and issued show-cause notices. After considering the responses, the RBI came to the conclusion that the non-compliance warranted the imposition of a monetary penalty.
These actions are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, the RBI said.
The RBI’s enforcement operations are conducted by the Enforcement Department. The RBI’s EFD was set up in April 2017 to separate enforcement action from the supervisory process. EFD identifies actionable violations from the inspection reports, risk assessment reports and scrutiny reports.
Market intelligence reports, references from the top management and complaints are also used for investigation. An Adjudication Committee then adjudicates the violations and determines the quantum of penalty.
The penalty thus imposed would be disclosed by RBI in the form of a press release and by the regulated entity as per the disclosure norms. The regulated entity will then be required to pay the penalty within a specific period.