Page 20 - Banking Finance March 2022

CO-OPERATIVE BANK NEWS

the money of the depositors, who are Other Restrictions on UCBs and Board the High Court permitting the State
from both the cooperative and private of Directors - UCBs. government to go ahead, Cooperation
sector, is safe and secure." RBI also fined Mula Sahakari Bank Ltd., Minister V.N. Vasavan's office said in a

National Federation of State Coopera- Sonai, Ahmednagar, Rs 25,000 for non- statement.
tive Banks (NAFSCOB) Managing Direc- adherence with directions issued by The decision is to go ahead with the
tor and International Cooperative RBI to Urban Co-operative Banks on merger at the earliest with the ap-
Banking Association President Bhima Exposure Norms & Statutory/Other proval of the Reserve Bank of India,
Subrahmanyam said that the RBI draft Restrictions-UCBs. the department said. Only the
scheme for merger of PMC bank with Lastly, RBI imposed a Rs 1 lakh penalty Malappuram district cooperative bank
bigger Urban Cooperative Banks would on Jila Sahakari Kendriya Bank had stood apart when the Kerala Bank
have been more desirable. Maryadit, Shivpuri for "contravention was created through the merger of 13
of/ non-compliance with the provisions district cooperative banks.
RBI slaps fines on 5 banks of the Banking Regulation Act, 1949 The merger had replaced the three-
totalling Rs 6.35 lakh for (the Act) and directions issued by the tier system with a two-tier system, an
Reserve Bank of India (RBI) on Know arrangement which guaranteed better
violating directions Your Customer (KYC)." interest rates and profits to the coop-

The Reserve Bank of India imposed RBI has explained its actions are based erators, according to the department.
penalties totalling Rs 6.35 lakh against on deficiencies in regulatory compli- The reluctance of the Malappuram
five banks for violating certain direc- ance and is not intended to pronounce bank to be part of the merger pre-
tions issued by the central bank. upon the validity of any transaction or vented the extension of modern bank-
agreement entered into by the banks ing facilities that were introduced in
The five banks are - Hyderabad District
Co-Operative Central Bank Ltd; Jila with their customers. the Kerala Bank.
Sahakari Kendriya Bank Maryadit, In all cases, the discrepancies were Chennai Central Co-op
Gwalior; Vyavsaik Sahakari Bank Lim- revealed in the inspection report of the
ited, Raipur; Mula Sahakari Bank Ltd., banks based on their financial position Bank penalized
Sonai, Ahmednagar and Jila Sahakari as on March 31, 2020. RBI has issued The Reserve Bank of India has imposed
Kendriya Bank Maryadit, Shivpuri . a notice to the banks advising them to a monetary penalty of Rs 1 lakh on
show cause as to why penalty should Chennai Central Co-operative Bank
RBI imposed a fine of Rs 2 lakh on
Hyderabad District Co-Operative Cen- not be imposed for non-compliance Ltd., Chennai, Tamil Nadu.
with the directions.
tral Bank violating certain directions The bank was penalized for non-adher-
issued by RBI contained in the "Circu- After considering the banks' replies and ence of certain directions issued by RBI
lar on 'Income Recognition, Asset Clas- oral submissions made during personal contained in the Circular on 'Income
sification and Provisioning- Recognition hearing, RBI came to the conclusion Recognition, Assets Classification, Pro-
of Loan Impairment by State / Central that the aforesaid charges of non-com- visioning and Other Related Matters
pliance with RBI directions were sub- dated June 22, 1996.
Co-operative Banks dated December
30, 2002," read an official statement stantiated and warranted imposition of This penalty has been imposed in ex-
monetary penalty.
issued by the RBI. ercise of powers vested in RBI under
RBI slapped a Rs 10,000 fine on Jila Malappuram district coop. and after taking into account the fail-
Sahakari Kendriya Bank Maryadit, bank merger soon ure of the bank to adhere to the afore-
Gwalior for contravention of directions said directions issued by RBI.
issued by the RBI on Know Your Cus- The Malappuram district cooperative This action is based on deficiencies in
bank will soon merge with the Kerala
tomer (KYC). The same day RBI also regulatory compliance and is not in-
Bank, the Cooperation Department
imposed a Rs 3 lakh fine on Vyavsaik tended to pronounce upon the validity
Sahakari Bank Limited, Raipur for fail- said. of any transaction or agreement en-
ing to comply with directions issued by The legal hurdles which had prevented tered into by the bank with its custom-
RBI on Exposure Norms and Statutory/ the merger had been removed with ers, clarified RBI. T

20 | 2022 | MARCH | BANKING FINANCE