- The Reserve Bank of India (RBI) has slapped fines totaling Rs25.95 lakh on nine cooperative banks and one non-banking financial company (NBFC) for not following the guidelines set by the banking regulator.
- The biggest fine, amounting to Rs15 lakh, was handed down to NKGSB Cooperative Bank Ltd, which is based in Mumbai.
- Other banks that faced penalties from the RBI include Jalna People’s Cooperative Bank Ltd from Maharashtra, Sri Ganesh Cooperative Bank Ltd and Tumkur Veerashaiva Cooperative Bank Ltd from Karnataka, Bagalkot District Central Cooperative Bank Ltd, and Kerala Mercantile Cooperative Bank Ltd.
- Additionally, the RBI penalized Odisha’s Cooperative Urban Bank Ltd, Tamil Nadu’s Sholinghur Cooperative Urban Bank Ltd, and Telangana’s Nizamabad District Cooperative Central Bank Ltd.
- Mikhael Capitalize Pvt Ltd, an NBFC operating out of Kerala, also received a fine.
The Reserve Bank of India (RBI) has slapped fines totaling Rs25.95 lakh on nine cooperative banks and one non-banking financial company (NBFC) for not following the guidelines set by the banking regulator. The biggest fine, amounting to Rs15 lakh, was handed down to NKGSB Cooperative Bank Ltd, which is based in Mumbai.
Other banks that faced penalties from the RBI include Jalna People’s Cooperative Bank Ltd from Maharashtra, Sri Ganesh Cooperative Bank Ltd and Tumkur Veerashaiva Cooperative Bank Ltd from Karnataka, Bagalkot District Central Cooperative Bank Ltd, and Kerala Mercantile Cooperative Bank Ltd.
Additionally, the RBI penalized Odisha’s Cooperative Urban Bank Ltd, Tamil Nadu’s Sholinghur Cooperative Urban Bank Ltd, and Telangana’s Nizamabad District Cooperative Central Bank Ltd.
Mikhael Capitalize Pvt Ltd, an NBFC operating out of Kerala, also received a fine.
NKGSB Cooperative Bank was penalized for not adhering to RBI’s directions regarding the management of advances for urban cooperative banks (UCBs). A statutory inspection by the RBI revealed that the bank had approved certain loans for purchasing gold.
Moreover, Jalna People’s Cooperative Bank was fined Rs75,000 for failing to comply with RBI’s guidelines on gold loans, specifically the bullet repayment scheme for primary UCBs. The RBI found that this bank had sanctioned gold loans under this scheme that exceeded the regulatory limits.
During a statutory inspection of Sri Ganesh Cooperative Bank, the RBI discovered that the bank had violated prudential inter-bank (gross) and counterparty exposure limits and had made donations that surpassed the allowed regulatory limit. Consequently, a penalty of Rs2.50 lakh was imposed on Ganesh Cooperative Bank.
Both Bagalkot District Central Cooperative Bank and Nizamabad District Cooperative Central Bank were fined Rs1 lakh each for violating Section 20 of the Banking Regulation Act (BR Act), as they had approved certain loans to their own directors.
Tumkur Veerashaiva Cooperative Bank has been hit with a fine of Rs50,000 for not following certain directives from the RBI under the supervisory action framework (SAF). The bank ran afoul of regulations by approving new loans and advances that had a risk weight over 100%. It also didn’t manage to cut down its exposure to sectors plagued by high non-performing assets (NPAs) and failed to keep its operating and administrative expenses in check.
Mikhael Capitalize, a non-banking financial company (NBFC) based in Kerala, has been fined Rs1 lakh for not adhering to some rules outlined in the master direction – NBFC non-systemically important non-deposit taking company RBI Directions, 2016, as well as the master direction – RBI NBFC-Scale Based Regulation Directions, 2023.
The RBI discovered that Mikhael Capitalize neglected to get prior written approval for a change in shareholding that exceeded 26% of its paid-up equity capital. On top of that, it didn’t notify the RBI about the appointment of an independent director within the required timeframe.
Kerala Mercantile Cooperative Bank has also been fined Rs50,000 for not complying with specific RBI directives under SAF. The bank went overboard with its capital expenditure, exceeding the allowed limit without getting prior approval from the RBI, which is a clear violation of the guidelines set under SAF.
Lastly, a Cooperative Urban Bank in Odisha has been penalized Rs2.70 lakh for not following RBI’s directions regarding exposure norms and the membership of cooperative banks in statutory or other credit information companies (CICs). The RBI found that this Odisha-based bank had crossed the prudential inter-bank (gross) and counterparty exposure limits and failed to secure membership in two CICs.
Sholinghur Cooperative Urban Bank, located in Tamil Nadu, has been slapped with a fine of Rs 1 lakh for not following the Reserve Bank of India’s (RBI) guidelines regarding exposure norms and other statutory requirements, including know-your-customer (KYC) regulations. An inspection by the RBI uncovered that the bank had approved loans to nominal members that exceeded the regulatory limit and did not upload customer KYC records to the central KYC records registry (CKYCR) within the required timeframe.
In a total of ten cases, the RBI stated that the penalties were imposed due to lapses in regulatory compliance and were not meant to comment on the legitimacy of any transactions or agreements made with their customers.