The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 61.60 lakh on Surat People’s Cooperative Bank, a leading urban cooperative bank in Gujarat, for non-compliance with specific RBI directives related to loans and advances granted to directors and their relatives. The RBI announced the penalty on Thursday through an official press release.
In the press release, the RBI stated, “The Reserve Bank of India has imposed a monetary penalty of Rs 61.60 lakh on Surat People’s Co-operative Bank Limited, Surat (the bank)”, the press release stated.
The fine has been levied due to non-compliance with various RBI directives, including those on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters’, ‘Loans and Advances to Directors and their Relatives, and Firms/Concerns in which they have an Interest’, ‘Maintenance of Deposit Accounts’, and ‘Customer Service’.”
The penalty has been imposed under the powers conferred on the RBI by section 47A(1)(c) of the Banking Regulation Act, 1949, in conjunction with sections 46(4)(i) and 56 of the same act.
During the recent annual general meeting of NAFCUB, Chairman Laxmi Das advocated for allowing cooperative banks to grant loans to their directors, similar to the practices followed by commercial banks.
However, he raised this point with one of the top RBI officials who said many urban cooperative banks still continued to provide loans to their directors or their relatives in violation of the RBI guidelines. I was embarrassed to offer any reply, Das said and urged the urban cooperative banks not to violate the RBI rules and regulations.
Additionally, the RBI has also imposed a fine of Rs 1.50 lakh on Bihar Awami Cooperative Bank for contravention of section 26A read with section 56 of the Banking Regulation Act, 1949 (BR Act), and for failing to comply with certain RBI directives related to ‘Know Your Customer (KYC)’ regulations.
Furthermore, the RBI has extended the period of directions on Colour Merchants Cooperative Bank by six months, until 25th March 2024.