RBI Imposes Monetary Penalty On Four Co-operative Banks And One NBFC

The Reserve Bank of India (RBI) has taken strict measures against several financial institutions for deficiencies in regulatory compliance. Monetary penalties have been imposed on four co-operative banks and a non-banking financial company (NBFC) as a result of their failure to adhere to RBI’s guidelines.

I. Shree Lodra Nagarik Sahakari Bank Ltd: ₹4.00 Lakh Penalty

• Shree Lodra Nagarik Sahakari Bank, located in Gandhinagar, Gujarat, has been slapped with a monetary penalty of ₹4.00 lakh by the RBI.
• The penalty was imposed for non-compliance with RBI’s directives on ‘Loans and advances to directors, relatives, and firms/concerns in which they are interested’ and ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’.
• The bank’s violations included:
  

  Sno.	Violations
  1.	Sanctioning a loan to a director’s relative.
  2.	Sanctioning loans with director’s relatives as guarantors.
  3.	Breaching the prudential inter-bank gross exposure limit.
  4.	Breaching the prudential inter-bank counterparty exposure limit.

II. Malpur Nagarik Sahakari Bank Ltd: ₹3.50 Lakh Penalty

• Malpur Nagarik Sahakari Bank, located in Aravalli, Gujarat, incurred a monetary penalty of ₹3.50 lakh from the RBI.
• This penalty was imposed due to non-compliance with the RBI’s directives on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’.
• The bank not only breached the prudential inter-bank gross exposure limit but also violated the prudential inter-bank counterparty exposure limit.

III. Jolarpet Co-operative Urban Bank Ltd: ₹50,000 Penalty

• The Jolarpet Co-operative Urban Bank, situated in Vellore, Tamil Nadu, faced a monetary penalty of ₹50,000 by the RBI.
• The penalty was imposed for non-compliance with the RBI’s directions on ‘Board of Directors – UCBs’ in conjunction with the directives on ‘Loans and advances to directors, their relatives, and firms/concerns in which they are interested’.
• The bank extended loans to its directors and their relatives, which contravened RBI guidelines.

IV. Limbasi Urban Co-operative Bank Ltd: ₹25,000 Penalty

• Limbasi Urban Co-operative Bank, located in Kheda, Gujarat, received a monetary penalty of ₹25,000 from the RBI.
• The penalty was imposed for non-compliance with the RBI’s directives on ‘Loans and advances to directors, relatives, and firms/concerns in which they are interested’ along with the directions on ‘Loans and Advances to Directors etc. – Directors as surety/guarantors – Clarification’.
• The bank sanctioned a loan where a relative of one of its directors acted as a guarantor.

V. Early Salary Services Private Ltd: ₹3.20 Lakh Penalty

• Early Salary Services Private Limited, based in Pune, faced a monetary penalty of ₹3.20 lakh for non-compliance with specific provisions of the “Non-Banking Financial Company – Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016”.
• The RBI noted that the company failed to establish a system of internal audit for all outsourced activities.

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