RBI penalises two co-operative banks citing rule violations

The Reserve Bank of India (RBI) on May 9 said it has imposed monetary penalties on Noida Commercial Co-operative Bank and Abhyudaya Co-operative Bank for non-compliance with certain directives.

The central bank has penalised Ghaziabad-based Noida Commercial Co-operative Bank with Rs one lakh for non-compliance with directives related to dividend payment. The bank had failed to adhere to the RBI directions prohibiting payment of dividends when it had paid unclaimed dividends of previous periods, the central bank said in a statement.

It has also imposed a penalty of Rs 58 lakh on Abhyudaya Co-operative Bank for non-compliances related to placement of deposits with other banks, monitoring and reporting mechanism of frauds, income recognition, asset classification, provisioning and other related matters and management of advances, the RBI said in a separate statement.

The banking regulator said that Abhyudaya Co-operative Bank accepted fresh deposits from other non-scheduled urban co-operative banks despite not meeting the criteria for doing so and had also not phased out 100 percent of the existing deposits of these lenders by March 31, 2019.

Further, the bank reported a fraud with a delay of 942 days, and failed to classify certain loan accounts as non-performing assets, the central bank said. The bank also failed to ensure the end use of funds lent by it.

Both the actions are based on deficiencies in regulatory compliance and are not related to any transaction or agreement entered into by the bank with its customers, the central bank noted.