The Reserve Bank of India cancelled the license of Sitapur Urban Cooperative Bank, imposed a penalty on four cooperative banks and extended the period of direction on Hiriyur Urban Cooperative Bank on Thursday.
Every depositor of Sitapur Urban Cooperative Bank would be entitled to receive deposit insurance claim amount of his/her deposits up to a monetary ceiling of Rs 5,00,000/- (Rupees five lakh only) from Deposit Insurance and Credit Guarantee Corporation (DICGC) subject to the provisions of the DICGC Act, 1961. As per the data submitted by the bank, 98.32% of the depositors are entitled to receive the full amount of their deposits from DICGC.
The Reserve Bank of India imposed a monetary penalty of Rs 10,000 on the District Co-operative Central Bank Ltd., Mahabubnagar, Telangana (the bank) for non-compliance with the directions issued by the National Bank for Agriculture and Rural Development (NABARD) on ‘Review of Frauds – Guidelines on Monitoring and Reporting System’ read with ‘Frauds – Guidelines for Classification, Reporting and Monitoring of Frauds’.
A monetary penalty of Rs 1.00 lakh has been imposed on Patan Co-operative Bank Limited, Mumbai, Maharashtra (the bank) for non-compliance with directions issued by RBI on ‘Reserve Bank of India –Know Your Customer (KYC) Direction, 2016’.
Similarly, RBI imposed a monetary penalty of Rs 1.00 lakh on the Prathamik Shikshak Sahakari Bank Limited, Satara, Maharashtra (the bank) for non-compliance with the directions issued by RBI on ‘Management of Advances-UCBs.
Besides, a monetary penalty of Rs 1.00 lakh has been imposed on Rajarshi Shahu Sahakari Bank Ltd., Pune, Maharashtra (the bank) for non-compliance with the directions issued by RBI on ‘Maintenance of Deposit Accounts – Primary (Urban) Co-operative Banks’.
This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949.
This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
The RBI extended the direction on Hiriyur Urban Cooperative Bank for a period of three months from the close of business on December 10, 2023 to close of business on March 10, 2024, subject to review. All other terms and conditions of the Directive under reference shall remain unchanged.
In the case of cancelling the license of the bank the RBI stated the reason that the bank does not have adequate capital and earning prospects. As such, it does not comply with the provisions of Section 11(1) and Section 22 (3) (d) read with Section 56 of the Banking Regulation Act, 1949.