RBI penalizes 3 cooperative banks for rule violations and cybersecurity lapses

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

The Reserve Bank of India (RBI) announced on June 19 that it has imposed monetary penalties on three cooperative banks, namely The Urban Co-operative Bank, Andhra Pradesh Mahesh Co-operative Urban Bank, and Dombivli Nagari Sahakari Bank, for violating rules.

The RBI has imposed a penalty of Rs 50 lakh on Dombivli Nagari Sahakari Bank, Rs 65 lakh on Andhra Pradesh Mahesh Co-operative Urban Bank, and Rs 6 lakh on The Urban Co-operative Bank, according to the releases.

The penalty on Andhra Pradesh Mahesh Co-operative Urban Bank and Dombivli Nagari Sahakari Bank was imposed because both banks failed to implement certain required controls, which resulted in a cybersecurity incident, as stated by the RBI.

On the other hand, The Urban Co-operative Bank was penalized for not ensuring appropriate Customer Due Diligence. It neglected to obtain necessary documents regarding the nature and proof of business and did not comply with instructions related to customer identification, allowing transactions in accounts without confirming the local address of customers. Additionally, it failed to adhere to instructions concerning the issuance of chequebooks, as mentioned in the release.

The RBI issued notices to the banks, asking them to explain why penalties should not be imposed for non-compliance with the directions. After considering their replies, the penalties were imposed.