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RBI imposed monetary penalty on 5 Co-operative Banks


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RBI Imposes Penalties on Five Tamil Nadu Co-operative Banks for Non-Compliance

The Reserve Bank of India (RBI) has imposed monetary penalties on five co-operative banks in Tamil Nadu for non-compliance with its guidelines. The penalties were announced in separate orders dated January 3, 2025, and were based on deficiencies identified during statutory inspections.

₹2 Lakh Penalty on Kamaraj Co-operative Town Bank

The RBI imposed a ₹2 lakh penalty on The Kamaraj Co-operative Town Bank Limited for violations related to capital adequacy norms, supervisory action framework (SAF), and Know Your Customer (KYC) guidelines. The inspection, conducted with reference to the bank’s financial position as of March 31, 2023, revealed multiple violations:

  • Loans exceeding the single-borrower exposure limit.
  • Fresh loans with risk weights above 100%.
  • Loans sanctioned without adhering to share-linking norms, despite low CRAR.
  • Refund of share capital to members while CRAR was below the regulatory minimum.
  • Delay in uploading customer KYC records to the Central KYC Records Registry (CKYCR).

The RBI concluded that the violations warranted a monetary penalty after considering the bank’s reply to a show-cause notice and oral submissions.

₹25,000 Penalty on Arcot Co-operative Urban Bank

The Arcot Co-operative Urban Bank Limited was fined ₹25,000 for failing to upload KYC records to CKYCR within the prescribed timeframe. The penalty was imposed based on similar inspections and subsequent proceedings.

₹50,000 Penalty on Cordite Factory Co-operative Bank

The RBI imposed a ₹50,000 penalty on The Cordite Factory Co-operative Bank Ltd. in Nilgiris for not complying with KYC guidelines. The bank failed to update KYC records on CKYCR, prompting regulatory action.

₹50,000 Penalty on Tamilnadu Circle Postal Co-operative Bank

The Tamilnadu Circle Postal Co-operative Bank Limited was also fined ₹50,000 for similar lapses in KYC compliance. The bank’s inability to upload KYC data to CKYCR within the specified timeline resulted in the penalty.

₹50,000 Penalty on Virudhunagar Co-operative Urban Bank

The Virudhunagar Co-operative Urban Bank Limited faced a ₹50,000 penalty for failing to adhere to KYC guidelines. The violation, specifically related to CKYCR updates, was confirmed after RBI reviewed the bank’s response to a show-cause notice.

RBI Clarifies Penalty Intent

The RBI clarified that the penalties are based solely on deficiencies in regulatory compliance and do not impact the validity of any transactions or agreements between the banks and their customers. Further, the penalties do not preclude additional actions that the RBI may take against the banks.

These actions highlight the RBI’s strict monitoring of compliance to ensure financial stability and safeguard customer interests.

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