The Reserve Bank of India (RBI) has levied penalties totaling Rs. 8 lakh on three cooperative banks in Maharashtra due to their failure to comply with regulatory directives. The Lokmangal Cooperative Bank Ltd faced the heaviest penalty, amounting to Rs5 lakh.
The other two banks penalized by the RBI are Satara Sahakari Bank Ltd and Udgir Urban Cooperative Bank Ltd.
Lokmangal Cooperative Bank was penalized Rs 5 lakh for failing to adhere to the guidelines concerning know your customers (KYC). During a statutory inspection, the RBI discovered that the bank had neglected to conduct periodic reviews of account risk categorizations and updates of KYC information in accordance with customer risk categorizations.
Satara Sahakari Bank incurred a penalty of Rs. 2 lakh for non-compliance with certain provisions of section 12(2) of the Banking Regulation Act (BR Act) and RBI directives on prudential norms related to capital adequacy for primary urban cooperative banks (UCBs). The RBI found that the bank had allowed the refund of share capital to its members, despite its capital to risk-weighted assets ratio (CRAR) being below the mandated 9%.
Udgir Urban Cooperative Bank was fined Rs 1 lakh for non-compliance with RBI directives on exposure norms and restrictions pertaining to UCBs and their board of directors. The RBI investigation revealed that the bank had approved loans for a relative of one of its directors, which was against regulatory guidelines.
The RBI emphasized that its enforcement actions against these banks highlight regulatory compliance shortcomings and do not signify a judgment on the validity of specific transactions or agreements between the banks and their customers.
