RBI slaps fines on 5 banks totalling Rs 6.35 lakh for violating directions

The Reserve Bank of India announced on Monday that it has imposed penalties totalling Rs 6.35 lakh against five banks for violating certain directions issued by the central bank.

The five banks are - Hyderabad District Co-Operative Central Bank Ltd; Jila Sahakari Kendriya Bank Maryadit, Gwalior; Vyavsaik Sahakari Bank Limited, Raipur; Mula Sahakari Bank Ltd., Sonai, Ahmednagar and Jila Sahakari Kendriya Bank Maryadit, Shivpuri . 

On February 9, RBI had imposed a fine of Rs 2 lakh on Hyderabad District Co-Operative Central Bank violating certain directions issued by RBI contained in the "Circular on 'Income Recognition, Asset Classification and Provisioning- Recognition of Loan Impairment by State / Central Co-operative Banks dated December 30, 2002," read an official statement issued by the RBI. 

On February 11,  RBI slapped a Rs 10,000 fine on Jila Sahakari Kendriya Bank Maryadit, Gwalior for contravention of directions issued by the RBI on Know Your Customer (KYC). The same day RBI also imposed a Rs 3 lakh fine on Vyavsaik Sahakari Bank Limited, Raipur for failing to comply with directions issued by RBI on Exposure Norms and Statutory/Other Restrictions on UCBs and Board of Directors - UCBs.

RBI also fined Mula Sahakari Bank Ltd., Sonai, Ahmednagar, Rs 25,000 for non-adherence with directions issued by RBI to Urban Co-operative Banks on Exposure Norms & Statutory/Other Restrictions-UCBs. 

Lastly, RBI imposed a Rs 1 lakh penalty on Jila Sahakari Kendriya Bank Maryadit, Shivpuri for "contravention of/ non-compliance with the provisions of the Banking Regulation Act, 1949 (the Act) and directions issued by the Reserve Bank of India (RBI) on Know Your Customer (KYC)."

RBI has explained its actions are based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.

In all cases, the discrepancies were revealed in the inspection report of the banks based on their financial position as on March 31, 2020. RBI has issued a notice to the banks advising them to show cause as to why penalty should not be imposed for non-compliance with the directions.

After considering the banks' replies and oral submissions made during personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.

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