The Reserve Bank of India (RBI) has imposed financial penalties on several cooperative banks in Gujarat due to non-compliance with regulatory directives. The penalised banks include The Mehmadabad Urban People’s Co-operative Bank Ltd. in Mehmadabad, The Jambusar People’s Co-operative Bank Ltd. in Bharuch, and The Rander People’s Co-operative Bank Ltd. in Surat.
The RBI issued individual orders detailing the fines levied on each bank, as follows:
On October 28, 2024, the RBI imposed a penalty of Rs 60,000 on The Mehmadabad Urban People’s Co-operative Bank Ltd., located in Mehmadabad, Kheda District. This action was taken due to the bank’s failure to comply with RBI’s directives on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’ and ‘Know Your Customer (KYC).’ The bank was found to have (i) failed to submit data to three CICs and submitted incomplete data to one, and (ii) neglected to conduct periodic account risk categorisation reviews at least every six months.
Similarly, The Rander People’s Co-operative Bank Ltd. in Surat was fined Rs 1.50 lakh. The RBI order noted the bank’s violation of section 26A, read with section 56 of the Banking Regulation Act, 1949 and non-compliance with RBI’s KYC guidelines. Specific lapses included (i) failure to transfer eligible amounts to the Depositor Education and Awareness Fund within the required timeframe, (ii) lack of risk-based KYC updates for customers and (iii) absence of a system for conducting account risk categorisation reviews every six months.
In the third instance, The Jambusar People’s Co-operative Bank Ltd. in Bharuch faced a penalty of Rs 10,000 for non-compliance with RBI directions on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks,’ as the bank failed to submit data to any CIC.
These penalties stem from statutory inspections conducted by the RBI to assess the financial health of these institutions as of March 31, 2023.
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