The Reserve Bank of India (RBI) has imposed monetary penalties on three cooperative banks for failing to comply with banking regulations. These penalties were issued following inspections conducted by the National Bank for Agriculture and Rural Development (NABARD) based on the banks’ financial positions as of March 31, 2023.
Penalty on The Anantnag Central Co-operative Bank Ltd.
RBI has fined The Anantnag Central Co-operative Bank Ltd., Jammu and Kashmir, ₹1 lakh for violating RBI’s specific directions prohibiting the acceptance of fresh deposits. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
During NABARD’s inspection, it was found that the bank had accepted new deposits despite explicit restrictions from RBI. After reviewing the bank’s response and related correspondence, RBI determined that the violation was valid, leading to the penalty.
Penalty on The Baramulla Central Co-operative Bank Ltd.
The Baramulla Central Co-operative Bank Ltd., Jammu and Kashmir, has been fined ₹5 lakh for the same violation—accepting fresh deposits despite RBI’s prohibition. This penalty was imposed under the same legal provisions as in the case of the Anantnag bank.
Following an inspection, NABARD identified non-compliance with RBI’s directions. Even after the bank was given a chance to explain, RBI concluded that the violation was sustained, warranting the penalty.
Penalty on The Gurdaspur Central Co-operative Bank Ltd.
The Gurdaspur Central Co-operative Bank Ltd., Punjab, has been fined ₹1 lakh for contravening Section 20 read with Section 56 of the Banking Regulation Act, 1949. This section prohibits banks from sanctioning loans to their own directors.
NABARD’s inspection found that the bank had sanctioned or renewed a loan related to one of its directors, violating banking regulations. Despite the bank’s response and oral submissions, RBI determined that the violation was valid and imposed the penalty.
RBI’s Stance on Regulatory Compliance
RBI has clarified that these penalties are based on deficiencies in regulatory compliance and do not question the validity of any financial transactions between the banks and their customers. The penalties serve as a warning to financial institutions to adhere strictly to RBI’s guidelines. Additionally, further action may be taken if required.
