Page 23 - Banking Finance August 2021

CO-OPERATIVE BANK NEWS

Co-Oper
Co-Operative Bank News
Co-Operaativtive Bank Ne Bank Newewss
Co-Oper
ew
e Bank N
a
s
Co-Operative Bank News
tiv

RBI imposes penalties on to why penalty should not be imposed discomfort on the issue, especially af-
for violation of the said directions. Af- ter the creation of a ministry of coop-
co-operative banks ter considering the banks' replies, the eration under home minister Amit

The Reserve Bank of India (RBI) on July RBI came to the conclusion that the Shah in the just-concluded Cabinet ex-
15 imposed monetary penalties on charges of non-adherence and violation pansion.
Udyam Vikas Sahakari Bank, Pune, and of RBI directions were substantiated In a six-page letter to the PM released
Sawantwadi Urban Cooperative Bank and warranted imposition of monetary after the meeting, Pawar has claimed
(UCB), Sindhudurg, for non-compliance penalty. that the amendments in the
with various regulatory directions.
"This action is based on deficiencies in Actinfringe on the state's powers to
Udyam Vikas Sahakari Bank was fined regulatory compliance and is not in- legislate on the cooperative sector.
Rs two lakh for contravention of the tended to pronounce upon the validity The NCP chief said that "the terms in-
directions issued by the RBI on Expo- of any transaction or agreement en- corporation, regulation, and winding
sure Norms and Statutory / Other Re- tered into by the bank with its custom- up of cooperative societies were pre-
strictions - UCBs. Sawantwadi Urban ers," the central bank said in separate served as state subjects under Entry 32
Cooperative Bank was fined Rs one statements for the two banks. list of II of the VII schedule of the Con-
lakh for contravention of and non-com- stitution of India".
pliance with directions contained in Pawar meets PM Modi,
the Supervisory Action Framework raised questions on RBI cancels licence of Dr
(SAF) issued by the RBI under sections
35A and section 36(1) read with sec- change in law to regulate Shivajirao Patil Nilangekar
tion 56 of the Banking Regulation Act, cooperative banks Urban coop bank ltd.
1949.
NCP chief Sharad Pawar, who held an The Reserve Bank of India (RBI) said it
The inspection report of Udyam Vikas hour-long meeting with Prime Minister has cancelled the licence of Dr
Sahakari Bank based on its financial Narendra Modi, raised serious ques- Shivajirao Patil Nilangekar Urban Co-
position as on March 31, 2019, re- tions on the constitutional validity of operative Bank Ltd, Nilanga, Latur, as
vealed that the bank had not adhered Banking Regulation Act amendments, it does not have adequate capital and
to prudential inter-bank gross exposure especially on encroaching into a state earning prospects.
limit and prudential inter-bank single subject and violating directive prin- Also, the Maharashtra-based bank
counter party limit. Sawantwadi UCB ciples of state policy. with its current financial position would
had by sanctioning fresh loans contra-
Pawar's concerns with granting be unable to pay its depositors in full,
vened one of the SAF instructions.
greater authority to Reserve Bank of the central bank said while announc-
Based on these reports, the RBI issued India to regulate the cooperative sec- ing cancellation of its licence. The
notices to the banks to show cause as tor are in line with growing opposition bank ceases to carry on banking busi-

BANKING FINANCE | AUGUST | 2021 | 23