The Reserve Bank of India (RBI) has imposed monetary penalties on four urban cooperative banks, including National Co-operative Bank Ltd, Harij Nagrik Sahakari Bank Ltd, Co-operative Bank of Mehsana Ltd and Lalbaug Co-operative Bank Ltd, for non-compliance with various regulatory directions. The fines, issued on Monday, total to Rs 12.5 lakh.
Lalbaug Co-operative Bank Ltd., Vadodara, Gujarat was hit with the highest fine of Rs 5 lakh for not complying with the RBI's directions on 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)' and 'Reserve Bank of India (Co-operative Banks – Interest Rate on Deposits) Directions, 2016'.
According to an inspection report and risk assessment report (RAR), the bank had exceeded its prudential inter-bank (gross) exposure limit and failed to pay interest on overdue recurring and term deposits from the date of maturity till the date of repayment at the applicable rate.
Co-operative Bank of Mehsana Ltd., Mehsana, Gujarat was fined Rs 3.5 lakh for non-compliance with RBI's directions on 'Loans and Advances to directors, relatives and firms/concerns in which they are Interested' along with 'Loans and Advances to Directors etc. – Directors as surety/guarantors – Clarification' and 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)'. The bank had sanctioned loans where a relative of one of the directors stood as guarantor and breached the inter-bank counterparty exposure limit.
Harij Nagrik Sahakari Bank Ltd., Harij, Gujarat was penalised Rs 3 lakh for not adhering to RBI's directions on 'Maintenance of Cash Reserve Ratio (CRR)', 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)', and 'Interest Rate on Deposits – Directions, 2016'. The bank had failed to maintain a minimum CRR for a few days, breached the inter-bank counterparty exposure limit, and was unable to make payment of applicable interest on deposits lying in the current accounts of deceased individual depositors or sole proprietorship concerns.
Lastly, National Co-operative Bank Ltd., Mumbai, Maharashtra was fined Rs 1 lakh for non-compliance with RBI's directions on 'Maintenance of Deposit Accounts-Primary (Urban) Co-operative Banks'. The bank had not conducted an annual review of inoperative accounts.
The penalties were imposed under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949. The RBI clarified that these actions were based on deficiencies in regulatory compliance and were not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.
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