RBI imposed penalties on Cooperative banks today, know why

The Reserve Bank of India on Thursday imposed monetary penalties on Sankheda Nagarik Sahakari Bank, Bhuj Commercial Co-operative Bank Limited, and Limdi Urban Co-operative Bank Limited, the apex bank release said. 

According to the release, the apex bank imposed a penalty of Rs 5 lakh on Sankheda Nagarik Sahakari Bank, Rs 50,000 on Limdi Urban Co-operative Bank, and Rs 1.50 lakh on Bhuj Commercial Co-operative Bank Limited. 

The penalty was imposed on the Sankheda Nagarik Sahakari Bank Limited, for non-compliance with directions issued by RBI on ‘Loans and advances to directors, relatives and firms/concerns in which they are interested’ read with RBI directions on ‘Loans and Advances to directors etc. - directors as surety/guarantors – Clarification’ and ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’. Similarly, the penalty was imposed on Bhuj Commercial Co-operative Bank Limited for non-compliance with the directions issued by RBI on ‘Know Your Customer (KYC) Direction, 2016’ and ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’.

The imposition of penalty on Limdi Urban Co-operative Bank was based on a deficiency in regulatory compliance and is not intended to be pronounced upon the validity of any transaction or agreement entered into by the bank with its customers. As per the release, this penalty has been imposed in the exercise of powers conferred on RBI under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

The Reserve Bank of India (RBI) has, by an order dated December 08, 2023, imposed a monetary penalty of Rs 1.50 lakh (Rupees One lakh Fifteen thousand only) on The Bhuj Commercial Co-operative Bank Limited, Dist. Kachchh, Gujarat (the bank) for non-compliance with the directions issued by RBI on ‘Know Your Customer (KYC) Direction, 2016’ and ‘Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016’.