RBI imposes monetary penalty on two cooperative banks

The Reserve Bank of India on Friday kept key policy rates unchanged and also retained its accommodative stance. This means that existing and new borrowers will continue to enjoy benign interest rates for now. Moreover, several banks have rolled out festive offers with discounted interest rates for home loans as also other retail loan categories. Existing borrowers can use this opportunity to reduce their interest burden by switching lenders.

Reserve Bank of India (RBI) on 26 October imposed monetary penalty on two cooperative banks for various rule violations. These two banks are Vasai Vikas Sahakari Bank, Maharashtra and the Citizens Urban Co-operative Bank Ltd., Jalandhar, Punjab.

A penalty of Rs 7 lakhs was imposed on Citizens Urban Cooperative Bank for violation of norms related to income recognition, asset classification, provisioning. Also, a penalty of Rs 90 lakhs was imposed on Vasai Bank on similar violations, the RBI said.

A statutory inspection of the Vasai bank conducted by RBI with reference to the bank’s financial position as on March 31, 2019 revealed noncompliance with the RBI directions on ensuring end use of funds in borrowal accounts and classification of loans/ advances as non-performing assets.

Similarly, an inspection of Citizens Bank revealed violations related to  non-identification of NPAs, wrong classification of assets and inadequate provisions made due to wrong classification of assets, the RBI said.