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RBI Imposes Penalties on Four Co-operative Banks for Regulatory Compliance Breaches
The Reserve Bank of India (RBI) has imposed monetary penalties on four co-operative banks due to their failure to comply with regulatory requirements. These co-operative banks are:
- The Becharaji Nagarik Sahakari Bank
- The Waghodia Urban Co-operative Bank
- The Viramgam Mercantile Co-operative Bank and
- The Baramati Sahakari Bank
The Reserve Bank has imposed a monetary penalty of ₹2.00 lakh on The Becharaji Nagarik Sahakari Bank Ltd., located in Mehsana, Gujarat. This penalty was imposed due to the bank’s failure to comply with the directions issued by the RBI regarding the placement of deposits with other banks by Primary (Urban) Co-operative Banks (UCBs). The bank had exceeded its prudential inter-bank counter-party exposure limit.
The Waghodia Urban Co-operative Bank Ltd in Vadodara and Viramgam Mercantile Co-operative Bank Ltd. has been fined ₹5.00 lakh for failing to comply with the directives issued by the Reserve Bank of India regarding ‘Loans and advances to directors, relatives, and firms or concerns in which they have an interest‘.
The bank had approved credit facilities for individuals, with the guarantors being relatives of its directors. The company had exceeded the maximum limit for inter-bank counter-party exposure as set by prudential regulations. Additionally, it failed to pay interest on recurring deposits that had reached maturity, from the date of maturity until the repayment date. The interest rate applied was either the rate applicable to savings deposits or the contracted rate of interest, whichever was lower. Additionally, the bank did not provide interest on term deposits for Sundays, holidays, or non-business working days. This applies to deposits that reached their maturity and were repaid on the following working days.
A monetary penalty of ₹2.00 lakh has been leveid on the Baramati Sahakari Bank Ltd., located in Baramati, Pune. This penalty has been imposed due to the bank’s failure to comply with the directions issued by the RBI regarding the maintenance of deposit accounts for primary (urban) co-operative banks. The bank had failed to credit interest to inactive savings bank accounts.
