Reserve Bank of India (RBI) has imposed monetary penalties on five cooperative banks for various regulatory lapses under the Banking Regulation Act, 1949. These penalties were imposed to ensure compliance and accountability in the cooperative banking sector.
Legal framework
- Penalties imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 (BR Act)
Jammu Central Co-operative Bank Ltd., Jammu & Kashmir
- Penalty: ₹1 lakh
- Reason: Non-compliance with RBI directions under Section 35A read with Section 56 of the BR Act
- Violation: Accepted fresh deposits in savings bank accounts despite RBI’s restrictions
Shree Warana Sahakari Bank Ltd., Warananagar, Maharashtra
- Penalty: ₹2 lakh
- Reason: Contravention of Section 26A read with Section 56 of the BR Act
- Violation: Failure to submit required statutory returns within the specified timeline
Sree Harihareshwara Urban Co-operative Bank Ltd., Harihar, Karnatak
- Penalty: ₹50,000
- Reason: Contravention of Section 31 read with Section 56 of the BR Act
- Violation: Delay in submission of statutory returns to RBI
Nicholson Co-operative Town Bank Ltd., Tamil Nadu
- Penalty: ₹1.5 lakh
- Reason: Non-compliance with RBI’s directions on:
- Loans and Advances to Directors, their Relatives, and Related Firms/Concerns
- Know Your Customer (KYC) norms
- Violation: Approved loans linked to directors and failed to upload KYC data to the Central KYC Records Registry (CKYCR) on time
Vishwakalyan Sahakara Bank Niyamit, Hubli, Karnataka
- Penalty: ₹50,000
- Reason: Contravention of Section 31 read with Section 56 of the BR Act
- Violation: Delay in submission of statutory returns to RBI
Legal Powers Used by RBI
RBI acted under:
- Section 47A(1)(c): Penalty for non-compliance
- Section 46(4)(i): Authority to impose penalties
- Section 56: Applicability of the Banking Regulation Act to cooperative societies
- These regulatory actions highlight RBI’s focus on improving governance, risk management, and compliance standards in cooperative banks, which often face governance and transparency challenges.