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RBI Cracks Down on Rule-Breaking: Fines 5 Cooperative Banks for Regulatory Lapses
The Reserve Bank of India (RBI) has imposed monetary penalties on five cooperative banks for failing to comply with various regulatory guidelines. The announcement was made , highlighting infractions by three banks in Gujarat and two in Bihar.
Fines Imposed
- Nawada Central Co-operative Bank Limited (Bihar) – Rs 1.25 lakh
- National Central Co-operative Bank Limited, Bettiah (Bihar) – Rs 4.10 lakh
- Vapor Industry Development Cooperative Bank Limited, Dahod (Gujarat) – Rs 1.50 lakh
- Mansa Nagarik Sahakari Bank Limited, Gandhinagar (Gujarat) – Rs 50,000
- MS Co-operative Bank Limited, Vadodara (Gujarat) – Rs 1.50 lakh
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Reasons for Penalties
- Bihar Banks:
- Nawada Central Co-operative Bank Limited failed to report borrower information to any of the four Credit Information Companies (CICs) and did not establish a system for reviewing account risk classifications at least every six months.
- National Central Co-operative Bank Limited, Bettiah did not transfer eligible undisclosed amounts to the Depositor Education and Awareness Fund (DEAF) within the prescribed timeframe. Additionally, it failed to submit borrower details to CICs and neglected proper risk classification for certain accounts.
- Gujarat Banks:
- Vapor Industry Development Cooperative Bank Limited failed to maintain the minimum required Cash Reserve Ratio (CRR) on several occasions, delayed periodic updates of Know Your Customer (KYC) records, and neglected regular risk classification reviews.
- Mansa Nagarik Sahakari Bank Limited did not pay the interest due on certain term deposits that were unclaimed after maturity.
- MS Co-operative Bank Limited delayed repayment of unclaimed term deposits and failed to update KYC records for some high-risk customers, alongside other deposit-related violations.
Regulatory Compliance
The RBI’s actions serve as a reminder for financial institutions to adhere strictly to banking regulations, ensuring the safety and transparency of customer funds. The penalties underscore the central bank’s commitment to maintaining the integrity of the financial system.
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