The Reserve Bank of India (RBI) has once again demonstrated its strict stance on non-compliance with banking regulations. In a press release issued on January 30, the RBI announced the imposition of monetary penalties on four banks for violating regulatory guidelines. Among them, three banks are based in Gujarat, while one is located in Odisha.
Fines Imposed on the Banks
- Shri Savli Nagrik Sahakari Bank Limited, Vadodara, Gujarat – Rs 2.10 lakh
- The Kosamba Mercantile Co-operative Bank Limited, Surat, Gujarat – Rs 2 lakh
- Vadali Nagrik Sahakari Bank Limited, Sabarkantha, Gujarat – Rs 2 lakh
- Odisha State Co-operative Bank Limited, Odisha – Rs 4 lakh
RBI’s Investigation and Show Cause Notices
During a statutory inspection conducted in March 2023, RBI discovered multiple violations by the three Gujarat-based banks. Similarly, NABARD conducted an inspection of Odisha State Co-operative Bank Limited and identified regulatory breaches. Following these findings, the RBI issued show cause notices to all four banks. After reviewing their responses, the central bank decided to impose penalties.
Reasons for RBI’s Action
Shri Savli Nagrik Sahakari Bank Ltd., Vadodara
- Failed to transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund within the stipulated time.
- Exceeded the maximum limit for investments under the Held to Maturity (HTM) category.
- Did not upload customer KYC records to the Central KYC Records Registry on time.
- Failed to submit credit information of borrowers to any of the three Credit Information Companies (CICs).
The Kosamba Mercantile Co-operative Bank Ltd., Surat
- Failed to adhere to prudential inter-bank (gross) and counterparty exposure limits.
- Did not upload KYC records to the Central KYC Records Registry within the required timeframe.
- Did not conduct periodic risk classification reviews for accounts at least once every six months.
Vadali Nagrik Sahakari Bank Ltd., Sabarkantha
- Approved loans where a relative of a director was a guarantor, violating banking norms.
- Breached prudential inter-bank (gross) and counterparty exposure limits.
- Did not conduct mandatory risk classification reviews for certain accounts at least once every six months.
Odisha State Co-operative Bank Ltd., Odisha
- Failed to dispose of non-banking assets within the prescribed period.
- Did not transfer eligible unclaimed funds to the Depositor Education and Awareness Fund within the stipulated time.
Conclusion
The RBI’s latest action underscores its commitment to ensuring compliance with banking regulations. By imposing these penalties, the central bank aims to enforce accountability and maintain financial discipline within the banking sector. Banks are expected to adhere strictly to RBI guidelines to prevent such regulatory actions in the future.
