RBI imposes monetary penalty on four co-operative banks for rule violations

Reserve Bank of India

The Reserve Bank of India (RBI) on June 5 said it has imposed monetary penalties on four cooperative banks for rule violations.

These banks are Kokan Mercantile Co-operative Bank, Bajirao Appa Sahakari Bank, Sawantwadi Urban Co-operative Bank and Shri Laxmi Sahakari Bank.

The central bank imposed a penalty of Rs 1 lakh each on Kokan Mercantile Co-operative Bank and Shri Laxmi Sahakari Bank. It imposed Rs 2 lakh and Rs 3 lakh penalty on Bajirao Appa Sahakari Bank and Sawantwadi Urban Co-operative Bank, respectively.

The penalty on Kokan Mercantile Co-operative Bank has been imposed as the bank was collecting fixed penal charges for a shortfall in the maintenance of minimum balance in saving bank accounts instead of a charge proportionate to the extent of the shortfall. This was done without giving notice to the effect that in the event of minimum balance not being restored in the account within a month from the date of notice, penal charges will be applicable, the release said.

Shri Laxmi Sahakari Bank did not put in place a system of periodic review of risk categorisation of accounts.

Further, the penalty on Bajirao Appa Sahakari Bank was imposed as the bank failed to adhere to prudential inter-bank gross as well as single counter-party exposure limit, put in place a system for periodic updation of KYC of accounts or periodic review of risk categorisation of accounts, the RBI said.

The Sawantwadi Urban Co-operative Bank had sanctioned, other than the permitted category, fresh loans and advances and had offered interest rates on term deposits higher than those offered by State Bank of India.

This action is based on 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.