The Reserve Bank of India (RBI) has taken action against three co-operative banks by imposing monetary penalties due to deficiencies in regulatory compliance. The affected banks are Saraswat Co-operative Bank Limited, Bassein Catholic Co-operative Bank Ltd, and Rajkot Nagarik Sahakari Bank Ltd.
Saraswat Co-operative Bank Limited, Mumbai
Monetary Penalty: ₹23 lakh
Violations: Contravention of various provisions of the Banking Regulation Act, 1949 (BR Act), and RBI directions on ‘Loans and advances to directors, their relatives, and firms/concerns in which they are interested.’
Details: The bank had contravened the provisions of the BR Act and RBI directions when it renewed a credit facility sanctioned to a borrower company while a director of the bank held the position of an independent director in the borrower company.
Bassein Catholic Co-operative Bank Ltd, Vasai, Maharashtra
Monetary Penalty: ₹25 lakh
Violations: Contravention of the provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act), and RBI directions on ‘Exposure Norms and Statutory/Other Restrictions.’
Details: The bank had granted multiple unsecured loans to one of its directors and his proprietorship firm, which violated regulatory norms.
Rajkot Nagarik Sahakari Bank Ltd., Rajkot
Monetary Penalty: ₹13 lakh
Violations: Non-compliance with the directions issued by RBI on ‘Interest Rate on Deposits.’
Details: The bank failed to pay eligible interest at the time of repayment on term deposits that matured on Sundays, holidays, or non-business working days and paid on the succeeding working days. It also failed to pay eligible interest on matured unpaid term deposits during the period they remained unclaimed with the bank.
The actions taken by the Reserve Bank were based on identified deficiencies in regulatory compliance and were not intended to pass judgment on the validity of any specific transactions or agreements entered into by the banks with their customers.
These penalties serve as a reminder of the importance of strict adherence to regulatory guidelines and the Banking Regulation Act to ensure the integrity and stability of the banking sector.