New Delhi, Sep 25 The Reserve Bank of India (RBI) on Thursday imposed monetary penalties on multiple cooperative banks across the country for failing to comply with its directions on various regulatory norms.
The action comes after inspections revealed deficiencies ranging from violations in housing finance rules to lapses in KYC compliance and cyber security measures. RBI, by orders dated September 22 and 23, penalised five banks.
Gayatri Co-operative Urban Bank Limited of Jagtial, Telangana, faced the heaviest penalty of Rs 10 lakh for selling insurance products to customers without adequate disclosure and transparency, in violation of RBI’s directions on marketing and distribution of mutual fund and insurance products.
Makarpura Industrial Estate Co-operative Bank Limited in Vadodara, Gujarat, was fined Rs 2 lakh for failing to comply with Know Your Customer (KYC) norms and for not implementing certain measures under the cyber security framework for urban cooperative banks.
The South Canara District Central Co-operative Bank Limited in Karnataka was penalised Rs 1.5 lakh for breaching prudential exposure limits on housing finance and for holding shares in another cooperative society, which is prohibited under the Banking Regulation Act.
Two banks received smaller penalties of Rs 50,000 each. The Guntur District Co-operative Central Bank Limited in Andhra Pradesh was fined for failing to upload KYC records of customers to the Central KYC Records Registry (CKYCR) within the prescribed time, while The Tamil Nadu Circle Postal Co-operative Bank Limited in Tamil Nadu was penalised for offering deposit interest rates higher than those permitted under the Supervisory Action Framework.
RBI clarified that these penalties were based on deficiencies in regulatory compliance and were not intended to question the validity of transactions between the banks and their customers.
The central bank also noted that the penalties are without prejudice to any further action it may initiate against the erring banks.
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