Mumbai, July 1: The Reserve Bank of India (RBI) has imposed monetary penalties on two co-operative banks for failing to comply with its regulatory directions.
In an order dated June 26, the RBI imposed a penalty of Rs 14.30 lakh on Shree Kadi Nagarik Sahakari Bank Limited, based in Mehsana district of Gujarat.
The action was taken for violations of RBI’s guidelines on donations to trusts and institutions where directors or their relatives have an interest, as well as on the management of advances by urban co-operative banks (UCBs).
According to the RBI, a statutory inspection of the bank was carried out based on its financial position as of March 31, 2024.
Following the inspection, the central bank found that the bank had made donations to a trust in which a relative of one of its directors was involved.
Additionally, the bank had failed to monitor the end-use of certain loans it had sanctioned.
After reviewing the bank’s written reply and oral submissions, RBI concluded that the charges were valid and warranted a monetary penalty.
Separately, the RBI also imposed a penalty of Rs 50,000 on Saibaba Nagari Sahakari Bank Maryadit, located in Sailu, Maharashtra.
This penalty was announced through an order dated June 24. The action was taken for non-compliance with directions on Know Your Customer (KYC) norms.
The RBI found that the bank had failed to upload KYC records of some customers to the Central KYC Records Registry (CKYCR) within the specified timeframe.
It also did not carry out periodic updates of KYC for certain customers as per the required schedule.
These lapses came to light during a statutory inspection of the bank’s operations as of March 31, 2024.
The RBI clarified that both actions are based on deficiencies in regulatory compliance and are not intended to question the validity of any specific customer transactions or agreements.
The central bank also noted that these penalties do not prevent it from taking further action against the banks if needed.