The Reserve Bank of India (RBI) has imposed fines on two cooperative banks as of June 3 for non-compliance with regulatory guidelines.
The banks penalized are Bavla Nagarik Sahakari Bank in Gujarat and Ron Taluka Primary Teachers Co-operative Bank Limited in Karnataka.
Fine Details and Reasons
Ron Taluka Bank Penalized
Ron Taluka Primary Teachers Co-operative Bank has been fined ₹75,000. The penalty is due to the bank’s failure to adhere to RBI guidelines on ‘Monitoring and Reporting Mechanism of Fraud’ and ‘Policy and Practice regarding Nominal Membership’.
According to the RBI, a statutory inspection conducted on the financial position as of March 31, 2022, revealed these non-compliances.
Despite the bank’s response to the notice and their oral submissions during the hearing, RBI concluded that the bank’s failure to report fraud and exceeding the limit for nominal membership justified the monetary penalty.
Bavla Nagarik Sahakari Bank Penalized
Bavla Nagarik Sahakari Bank faces a penalty of ₹3 lakh for not following RBI’s issued guidelines.
The statutory inspection of the bank was conducted based on its financial position as of March 31, 2023.
The inspection revealed the bank’s failure to comply with specific RBI instructions, leading to the fine.
Allegations and Findings
Allegations Against Ron Taluka Bank
The RBI’s findings showed that Ron Taluka Bank did not report frauds as required and exceeded the prescribed limit for nominal members relative to regular members.
These actions led to the RBI imposing the penalty after confirming the violations during a supervisory review.
Allegations Against Bavla Nagarik Sahakari Bank
The Bavla Nagarik Sahakari Bank was found guilty of several violations, including sanctioning and renewing loans involving relatives of the bank’s directors as beneficiaries or guarantors, and failing to perform risk-based periodic KYC updates within the prescribed timeframe.
The RBI’s decision to impose the penalty was based on these substantiated allegations following the bank’s response to the notice and oral submissions.
