Tuesday proved unlucky for urban co-op banks when three of them were penalized by the RBI for violation of various norms. These are Malkapur Urban Cooperative Bank, Dr Babasaheb Ambedkar Urban Co-operative Bank and Gadhinglaj Urban Co-operative Bank.
RBI imposed a monetary penalty of ?2.00 lakh on the Malkapur Urban Cooperative Bank Limited, Malkapur, Maharashtra for non-compliance with the directions issued by the RBI to Urban Co-operative Banks on Board of Directors – UCBs and Know Your Customer (KYC).
Dr Babasaheb Ambedkar Urban Co-operative Bank Limited, Nagpur, Maharashtra was also penalized by Reserve Bank of India for contravention of the directions issued by RBI to Urban Cooperative Banks on Board of Directors and Exposure Norms and Statutory/Other Restrictions. The cost of penalty was again Rs 2 lac.
The third UCB penalized by RBI is the Gadhinglaj Urban Co-operative Bank based in Gadhinglaj in Maharashtra. RBI imposed a fine of Rs 10 lac as the UCB.
The UCB was found guilty of non-compliance with the directions issued by RBI on Loans and Advances to Directors, Relatives and Firms/Concerns in which they are Interested; Supervisory action framework issued by RBI under section 35 A and section 36 read with section 56 of the Banking Regulation Act, 1949 (the Act); Exposure Norms and Statutory Other Restrictions- UCBs and Know Your Customers (KYC).
All the banks tried to explain their positions but after considering their replies to the Notice, and oral submissions made during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty.