RBI fines five co-operative banks in Gujarat, Maharashtra, and Meghalaya

The Reserve Bank of India (RBI) has imposed fines totaling ₹4.16 lakh on five co-operative banks in Gujarat, Maharashtra, and Meghalaya for failing to meet regulatory standards.

According to an RBI press release, Jambusar People’s Co-operative Bank Ltd., based in Bharuch, Gujarat, has been fined Rs 10,000 for failing to comply with RBI’s instructions on "Membership of Credit Information Companies (CICs) by Co-operative Banks." A statutory inspection by the RBI, based on the bank’s financial position as of March 31, 2023, revealed that the bank did not submit data to any of the CICs. The RBI clarified that this penalty is solely due to regulatory compliance issues and does not affect any transactions between the bank and its customers.

The RBI has imposed a penalty of Rs 1.5 lakh on Rander People’s Co-operative Bank Ltd., in Surat, Gujarat, for violations of RBI guidelines, specifically for not following Know Your Customer (KYC) requirements. During its inspection, the RBI found that the bank had not transferred eligible funds to the Depositor Education and Awareness Fund within the specified time, failed to conduct risk-based KYC updates, and lacked a system for reviewing the risk categorization of accounts at least once every six months.

The RBI has also imposed a fine of Rs 60,000 on Gujarat-based Mehmadabad Urban People’s Co-operative Bank Ltd. in Kheda for non-compliance with RBI’s directions on CIC membership and KYC requirements. The RBI’s inspection, based on the bank’s financial records as of March 31, 2023, revealed that the bank failed to submit data to three CICs and only partially submitted data to one CIC. Additionally, it did not conduct the required six-monthly reviews of risk categorization for customer accounts.

In Maharashtra, Sahyog Urban Co-operative Bank Ltd., located in Udgir, has been fined Rs 1.5 lakh by the RBI for violating Section 26A of the Banking Regulation Act, 1949. The RBI’s inspection showed that the bank did not transfer eligible amounts to the Depositor Education and Awareness Fund within the prescribed period.

In Meghalaya, the RBI imposed a penalty of Rs 1 lakh on Tura Urban Co-operative Bank Ltd. for failing to comply with the RBI’s Supervisory Action Framework (SAF). An inspection of its financial position as of March 31, 2023, revealed that the bank incurred capital expenditure above the allowed limit of ₹25,000 per year without prior RBI approval and issued fresh loans exceeding the SAF-prescribed exposure limits.

The RBI stated that all these penalties are due to regulatory deficiencies and do not affect any transactions or agreements between the banks and their customers. Furthermore, the imposition of these penalties does not preclude additional actions that the RBI may initiate in response to ongoing compliance monitoring.