RBI imposes monetary penalty on five cooperative banks

RBI has imposed monetary penalty on NKGSB bank for various rule violations

The Reserve Bank of India (RBI) on January 18 imposed monetary penalty on five cooperative banks for various rule violations.  In one instance, the central bank imposed a monetary penalty of Rs50 lakh on NKGSB Co-operative Bank Ltd for violation of Know Your Customer norms issued by RBI, the central bank said.

This action is based on deficiency 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, the RBI said.

The statutory inspection of the bank conducted by RBI revealed that the bank had opened and allowed transactions in current accounts of a company without undertaking customer due diligence procedure.

Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the RBI directions, the central bank said.

After considering the bank’s reply to the notice the RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, the central bank said.

In a separate press release, the RBI said it has imposed a Rs 15.00 lakh monetary penalty on Mumbai-based New India Co-operative Bank for non-compliance with the directions issued by RBI on donations for public, charitable purposes out of profits of UCBs.

The statutory inspection of the bank conducted by RBI revealed that the bank had breached the prescribed ceiling on donations during Financial Year 2020-21. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the RBI directions.

After considering the bank’s reply to the notice, the additional submissions made by it and oral submissions made during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, the central bank said.

Also, the central bank imposed a monetary penalty of Rs Seven lakhs on Gujarat-based  Mehsana Nagrik Sahakari Bank Limited for violations pertaining to loans and advances to directors, relatives and firms, concerns in which they are Interested. Inspections revealed that the bank had sanctioned loans wherein a relative of one of the bank’s directors stood as guarantor, the RBI said.

In separate press releases, the RBI said it imposed moneatry penalty on two other cooperative banks-- Patdi Nagarik Sahakari Bank Limited of Gujarat and  Patdi Nagarik Sahakari Bank Limited of Gujarat for non-compliance with certain rules.