- The Reserve Bank of India (RBI) has slapped a fine of ₹2 lakh on the Belagavi District Central Cooperative (BDCC) Bank for not following loan disbursal regulations.
- The cooperative bank was found to have breached rules by not disbursing loans to its directors, exceeding the regulatory limits on gold loans under the bullet repayment scheme, and approving loans for non-residential commercial real estate projects, according to a letter from the RBI.
- BDCC has breached provisions of Section 20 in conjunction with Section 56 of the Banking Regulation Act, 1949 (BR Act), and has failed to comply with certain directives from the RBI regarding ‘Gold Loan – Bullet Repayment’ and ‘Exposure to Commercial Real Estate’.
- This penalty has been imposed under the authority granted to the RBI by Section 47A(1)(c) along with Sections 46(4)(i) and 56 of the BR Act, as stated in the RBI’s letter.
- The violations date back six to seven years.
The Reserve Bank of India (RBI) has slapped a fine of ₹2 lakh on the Belagavi District Central Cooperative (BDCC) Bank for not following loan disbursal regulations. The cooperative bank was found to have breached rules by not disbursing loans to its directors, exceeding the regulatory limits on gold loans under the bullet repayment scheme, and approving loans for non-residential commercial real estate projects, according to a letter from the RBI.
BDCC has breached provisions of Section 20 in conjunction with Section 56 of the Banking Regulation Act, 1949 (BR Act), and has failed to comply with certain directives from the RBI regarding ‘Gold Loan – Bullet Repayment’ and ‘Exposure to Commercial Real Estate’. This penalty has been imposed under the authority granted to the RBI by Section 47A(1)(c) along with Sections 46(4)(i) and 56 of the BR Act, as stated in the RBI’s letter. The violations date back six to seven years.
This action comes after two rounds of inquiries conducted by NABARD officials and the RBI. A show cause notice was issued to the bank’s management, and they were asked to provide both oral and written responses.
“This action stems from shortcomings in statutory and regulatory compliance and is not meant to question the validity of any transactions or agreements made by the bank with its customers. Additionally, the imposition of this monetary penalty does not affect any other actions that the RBI may take against the bank,” the letter explained.
The bank has acknowledged the violations.
Balachandra Jarkiholi, the former director of the bank, stated that the allegations date back to 2019, when Ramsh Katti was at the helm as chairman. He pointed out that Mr. Katti, who led the bank for nearly twenty years, made decisions on his own and disregarded RBI regulations. “I was part of the board of directors at that time, but Mr. Katti didn’t consult me or the other directors. He bears the responsibility for the mistakes,” Jarkiholi remarked. He also accused Mr. Katti, whose panel recently lost the elections, of spreading rumors about the new chairman, Anna Saheb Jolle, and the other directors. “During his time, Mr. Katti even approved loans for his relatives, yet he’s now blaming the new management. That’s just not right,” he added.
On the flip side, Mr. Katti has asserted that the board members back then pressured him into breaking the rules. “It’s true that we issued loans to some directors in violation of regulations. But that was due to the pressure from the members. I warned them against it, but they insisted. In one instance, I even wrote to the Joint Registrar of Cooperative Societies to oppose such actions. However, the members managed to convince the state government to ignore my letter. Now they can’t just turn around and point fingers at me. As for the three cases highlighted by the RBI, they’re not that serious. All the loans were small amounts and were secured properly,” Mr. Katti explained.