The Reserve Bank of India (RBI) recently imposed fines totaling Rs 14.1 lakh on five co-operative banks in Maharashtra and Madhya Pradesh for various regulatory violations. The RBI’s actions target lapses in compliance with key guidelines, including the Supervisory Action Framework (SAF), Know Your Customer (KYC) norms, exposure limits, and rules on loans to directors and relatives.
According to a press release by the RBI, The Vaijapur Merchants Co-operative Bank in Maharashtra was fined Rs 7.5 lakh for violating SAF directions by making donations to entities and offering interest rates higher than permitted limits. Additionally, the bank was found to lack effective software for detecting suspicious transactions. Meanwhile, the Maa Sharda Mahila Nagrik Sahakari Bank in Madhya Pradesh was fined Rs 1 lakh for breaching prudential inter-bank gross and counterparty exposure limits.
Maharashtra's Prerna Nagari Sahakari Bank was fined Rs 2 lakh for sanctioning a loan to a firm associated with a director's relative, in which the director stood as guarantor. The Shri Shiveshwar Nagari Sahakari Bank in Maharashtra was fined Rs 1 lakh for failing to transfer unclaimed deposits to the Depositor Education and Awareness Fund within the prescribed period.
Additionally, the Gondia District Central Co-operative Bank in Maharashtra was fined Rs 2.6 lakh for violations of the Banking Regulation Act, 1949, and failure to comply with RBI’s requirements for membership in three Credit Information Companies (CICs). The bank was found to have sanctioned a loan to a director, contravening regulations. This penalty was imposed following a statutory inspection conducted by NABARD based on the bank’s financial status as of March 31, 2023.
The RBI emphasized that these penalties are due to deficiencies in regulatory compliance and are not intended to impact the validity of any customer transactions. Furthermore, these actions are without prejudice to any other steps the RBI may take.