The Reserve Bank of India (RBI) has imposed monetary penalties on four co-operative banks for failing to comply with its Priority Sector Lending (PSL) guidelines and directives regarding contributions to the Micro and Small Enterprises (MSE) Refinance Fund. The penalties were issued under the Banking Regulation Act, 1949 and highlight regulatory deficiencies in meeting PSL targets.
Details of the Penalized Banks
- Sreenivasa Padmavathi Co-operative Urban Bank Ltd., Telangana
- Penalty Amount: ₹1.20 lakh
- Reason: Failure to deposit the required amount in the MSE Refinance Fund, administered by Small Industries Development Bank of India (SIDBI), despite RBI’s specific directions for PSL shortfall for FY 2022-23.
- Sind Co-operative Urban Bank Ltd., Telangana
- Penalty Amount: ₹1.30 lakh
- Reason: Despite receiving a cautionary letter from RBI, the bank did not deposit the prescribed amount in the MSE Refinance Fund for PSL shortfall.
- The Karnataka Co-operative Bank Ltd., Muddebihal, Karnataka
- Penalty Amount: ₹5.00 lakh
- Reason: The bank ignored RBI’s directives to contribute to the MSE Refinance Fund and failed to comply even after receiving warnings.
- The Karimnagar Co-operative Urban Bank Ltd., Telangana
- Penalty Amount: ₹3.10 lakh
- Reason: Similar to other banks, it did not meet its PSL target and failed to deposit the required amount in SIDBI’s MSE Refinance Fund.
Regulatory Action and RBI’s Stand
RBI had issued notices to these banks, seeking explanations for their non-compliance. After reviewing their responses and holding personal hearings, RBI determined that the violations warranted monetary penalties.
The penalties are purely regulatory measures and do not impact the banks’ existing agreements or transactions with their customers. Additionally, RBI may take further action if necessary to ensure compliance with its directives.
This action serves as a reminder to all financial institutions to adhere strictly to RBI’s guidelines on Priority Sector Lending and regulatory compliance.
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