RBI imposes monetary penalty on eight co-operative banks

The Reserve Bank of India has imposed a monetary penalty on eight cooperative banks for violating certain norms. Based on all the violations, a notice was issued to each bank separately advising them to show cause as to why penalty should not be imposed for the said violation.

The RBI has imposed a monetary penalty of Rs 5 lakh on Uttar Pradesh-based National Urban Co-operative Bank after an inspection discovered that the lender failed to identify certain accounts as non-performing assets.

The RBI has also imposed a monetary penalty of Rs 1 lakh on Kendrapara Urban Cooperative Bank for not complying with directions pertaining to Know Your Customer (KYC). The bank failed to undertake periodic review of risk categorisation of customer accounts, the regulator said in a separate release.

The regulator has also slapped a penalty of Rs 10 lakh each on Andhra Pradesh-based Kakinada Co-operative Town Bank and Nellore Co-operative Urban Bank Limited. The Kakinada Co-operative Town Bank did not comply with directions issued under Income Recognition, Asset Classification, Provisioning and Other related Matters.

The Nellore Co-operative Urban Bank violated rules issued on prohibition of loans and advances to directors and their relatives and firms or concerns in which they are interested and exposure norms and statutory or other restrictions.

Similarly, the RBI has also imposed a monetary penalty of Rs 55 lakh on Visakhapatnam Co-operative Bank for violation with directions issued under Income Recognition, Asset Classification, Provisioning and other related matters along with norms pertaining to finance for housing schemes. It has also penalised Telangana based Darussalam Co-operative Urban Bank with Rs 10 lakh and Kerala-based Ottapalam Co-operative Urban Bank with Rs 5 lakh for violating similar norms.

It has also penalised Tamil Nadu-based Bharat Heavy Electricals Employees’ Co-operative Bank with Rs 10 lakh for non-compliance with directions issued under Exposure Norms and Statutory or Other Restrictions. The central bank said that all these actions are based on deficiencies in regulatory compliance and are not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.