RBI Imposes Monetary Penalty On 4 Cooperative Banks For Rule Violations

These banks are Baghat Urban Co-operative Bank, the Sahebrao Deshmukh Cooperative Bank, Sharad Sahakari Bank and Col. R.D. Nikam Sainik Sahakari Bank

The RBI clarified in the statements that the penalties are not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

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The Reserve Bank of India (RBI) on Monday imposed a monetary penalty on four cooperative banks for violating rules.

These banks are Baghat Urban Co-operative Bank, the Sahebrao Deshmukh Cooperative Bank, Sharad Sahakari Bank and Col. R.D. Nikam Sainik Sahakari Bank.

The RBI imposed Rs 8 lakh penalty on Baghat Urban Co-operative Bank, Solan, Himachal Pradesh, Rs 6 lakh on Sharad Sahakari Bank, Pune, and Rs 1 lakh each on Sahebrao Deshmukh Cooperative Bank, Mumbai, and Col. R.D.Nikam Sainik Sahakari Bank, Satara.

According to a statement by the RBI, "This penalty has been imposed in the exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949 (the Act), taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.”

The central bank clarified in the statements that the penalties are not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

The RBI found Baghat Urban Co-operative Bank non-compliant with specific directions issued to the bank by RBI under Supervisory Action Framework. In the case of the Sahebrao Deshmukh Cooperative Bank, the lender reported cases of fraud with delay, the central bank said.

Additionally, Sharad Sahakari Bank failed to put in place a system for periodic updating of KYC of accounts and did not pay applicable interest on balance amounts lying in current accounts of deceased individual depositors or sole proprietorship concerns while making payments to the claimants, the central bank said.

Col. R.D.Nikam Sainik Sahakari Bank had not transferred balances, in certain accounts which were unclaimed for more than 10 years to Depositor Education and Awareness Fund, the RBI added.