RBI Fines 5 Co-Operative Banks

The Reserve Bank of India (RBI) has recently taken strict action against five cooperative banks, issuing monetary penalties for deficiencies in regulatory compliance. These cooperative banks include Indapur Urban Co-operative Bank Ltd, Janakalyan Sahakari Bank Ltd, The Patan Urban Co-operative Bank Ltd, Pune Merchants Co-operative Bank Ltd, and Pune Municipal Corporation Servant’s Co-operative Urban Bank Ltd. The penalties were imposed under the powers granted to the RBI by certain provisions of the Banking Regulation Act, 1949.

Indapur Urban Co-operative Bank Ltd., Pune, Maharashtra: ₹5.00 Lakh Penalty

Non-Compliance Issues:

• The bank failed to adhere to the prudential inter-bank gross exposure limit.
• Imposed fixed penal charges for savings bank accounts’ minimum balance shortfall instead of proportionate charges.
• Neglected to classify certain accounts as Non-Performing Assets (NPA).

RBI Action:

• Imposed a monetary penalty of ₹5.00 lakh.

Janakalyan Sahakari Bank Limited, Mumbai: ₹5.00 Lakh Penalty

Non-Compliance Issues:

• Failure to report credit information on eligible loan accounts to the Central Repository of Information on Large Credits (CRILC) within the prescribed timeline.

RBI Action:

• Imposed a monetary penalty of ₹5.00 lakh.

The Patan Urban Co-operative Bank Limited, Satara, Maharashtra: ₹2.00 Lakh Penalty

Non-Compliance Issues:

• Contravention of Banking Regulation Act, 1949, Section 26A, and Section 56.
• Non-compliance with RBI directions on ‘The Depositor Education and Awareness Fund.’
• Failure to transfer eligible amounts to the Depositor Education and Awareness Fund within the prescribed period.

RBI Action:

• Imposed a monetary penalty of ₹2.00 lakh.

Pune Merchants Co-operative Bank Limited, Pune: ₹1.00 Lakh Penalty

Non-Compliance Issues:

• Non-compliance with RBI directions on ‘Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks.’
• Failure to conduct an annual review of inoperative/dormant accounts.

RBI Action:

• Imposed a monetary penalty of ₹1.00 lakh.

Pune Municipal Corporation Servant’s Co-operative Urban Bank Limited, Pune: ₹1.00 Lakh Penalty

Non-Compliance Issues:

• Non-compliance with RBI directions on ‘Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks.’
• Failure to conduct an annual review of inoperative/dormant accounts.

RBI Action:

• Imposed a monetary penalty of ₹1.00 lakh.

Ensuring Regulatory Integrity

• The RBI clarified that these monetary penalties were imposed solely based on deficiencies in regulatory compliance and were not intended to pass judgment on the validity of any transactions or agreements between the banks and their customers.
• The stringent measures underscore the RBI’s commitment to maintaining the integrity and stability of the financial system by ensuring that cooperative banks adhere to established regulatory guidelines.

Questions Related to Exams

Q1. Name one cooperative bank penalized by the RBI for non-compliance with CRILC reporting.

Answer: Janakalyan Sahakari Bank Limited, Mumbai.

Q2. Which cooperative bank in Satara, Maharashtra, faced penalties for not transferring eligible amounts to the Depositor Education and Awareness Fund?

Answer: The Patan Urban Co-operative Bank Limited.

Q3. Which cooperative bank neglected to conduct an annual review of inoperative/dormant accounts, leading to a penalty?

Answer: Pune Municipal Corporation Servant’s Co-operative Urban Bank Limited, Pune.