RBI imposes Rs 8.3 lakh penalty on five co-operative banks in Gujarat and Odisha

The Reserve Bank of India (RBI) has imposed penalties totaling Rs 8.35 lakh on five co-operative banks—four in Gujarat and one in Odisha—for non-compliance with banking regulations. These penalties are based on statutory inspections and findings of various regulatory breaches.

According to an RBI press release, Amod Nagric Co-operative Bank, Bharuch, Gujarat, has been fined Rs 1.00 lakh for failing to comply with directions related to loans and advances to directors, relatives, and firms they are interested in, as well as Know Your Customer (KYC) norms. The bank had sanctioned loans to a director's relative, who was also a guarantor. Additionally, it failed to upload KYC records for certain customer accounts within the required timeline.

Karjan Nagarik Sahakari Bank, Vadodara, Gujarat, has been fined Rs 2.10 lakh for violations concerning credit information company membership, deposit placements, and KYC norms. The bank failed to transfer unclaimed amounts to the Depositor Education and Awareness Fund, did not maintain the minimum Cash Reserve Ratio for some days, and failed to update KYC for certain customers.

RBI has imposed a fine of Rs 1.25 lakh on Rajula Nagrik Sahakari Bank, Amreli, Gujarat, for not adhering to RBI's directions on loans to directors and relatives, as well as the maintenance of deposit accounts. The bank had sanctioned cash credit limits with directors’ relatives acting as guarantors and failed to classify certain accounts as dormant after a prolonged period of inactivity.

Vijay Commercial Co-operative Bank, Rajkot, Gujarat, has been fined Rs 1.00 lakh for failing to conduct periodic reviews of risk categorization for customer accounts as per KYC requirements.

RBI has imposed a fine of Rs 3.00 lakh on Sundargarh District Central Co-operative Bank, Odisha, for contravention of statutory provisions and non-compliance with KYC norms. The bank sanctioned loans to its directors, failed to transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund, and did not follow proper Customer Due Diligence procedures when opening new accounts.

These penalties were imposed under the provisions of the Banking Regulation Act, 1949, and the Credit Information Companies (Regulation) Act, 2005. The RBI clarified that these actions are not intended to challenge the validity of transactions or agreements made by the banks with customers. The penalties are based solely on regulatory deficiencies and are separate from any other actions that may be initiated by the RBI.