Page 24 - Banking Finance July 2023

lines for lack of governance practices Rs 3 lakh penalty on Bajirao Appa along with police personnel then con-
and conflicts of interest. Sahakari Bank and Sawantwadi Urban ducted a survey on Thursday. "Accord-
Co-operative Bank, respectively. ing to the Income Tax Act and Rules,
the financial institutions including co-
Cooperative banks face The penalty on Kokan Mercantile Co-
operative banks are statutorily obliged
operative Bank has been imposed as
challenges on compromise to file details of cash deposits by cus-
the bank was collecting fixed penal
tomers above certain limits and fixed
settlements, say experts charges for a shortfall in the mainte-
deposits of above Rs 10 lakh in the
The Framework for Compromise nance of minimum balance in saving
form of Statement of Financial Trans-
Settlements and Technical Write-offs bank accounts instead of a charge pro-
actions," the sources said.
introduced by the Reserve Bank of In- portionate to the extent of the short-
dia may pose policy and regulatory fall. This was done without giving no- The cooperative banks should inform
tice to the effect that in the event of the name, PAN number, and account
challenges for some cooperative banks,
mainly small urban cooperative banks minimum balance not being restored details of those customers who have
(UCBs), because they lack the profes- in the account within a month from conducted such financial transactions
the date of notice, penal charges will to the department, they said. As the
sional expertise, experts said.
be applicable, the release said. bank did not respond to any of the
A compromise settlement refers to an
communications sent by the depart-
arrangement between a borrower and ment, the on-the-spot survey was con-
IT wing unearths wilful
a bank, where a loan is cleared by pay-
ducted.
ing a smaller amount than what is due. default by Tamil Nadu
"UCBs and mainly some small UCBs based cooperative bank Priority Sector Lending tar-
may have issues in dealing with the
causing loss to exchequer get deadline for Urban
compromise settlements framework as
The Income Tax department has un-
they lack professional experience on Cooperative Banks ex-
earthed a "willful default" by a Tamil
the policy front when compared to big-
Nadubased cooperative bank causing tended
ger UCBs," said NS Vishwanathan,
losses to the exchequer of several Urban cooperative banks (UCB) are
former deputy governor of the RBI
crore rupees, sources said. getting more regulatory relaxations.
who also headed a committee on co-
The Reserve Bank of India (RBI) has
operative banks. According to the department's Intelli-
extended the deadline for meeting
gence and Criminal Investigation wing,
their priority sector lending (PSL)
financial institutions, banks, and coop-
RBI imposes monetary
erative banks are supposed to inform norms.
penalty on four co-opera- the department of cash deposits and Moreover, those who have already
tive banks for rule viola- interest paid to customers in the form met the targets would be suitably re-
of a Statement of Financial Transac- warded. They will also be allowed to
tions
tions (SFT). resolve stressed assets the same as
RBI said it has imposed monetary pen-
However, the cooperative bank in commercial banks are allowed.
alties on four cooperative banks for
Pudukottai district was not sending the "With a view to ease the implementa-
rule violations.
details of the interest paid to custom- tion challenges faced by the UCBs, it has
These banks are Kokan Mercantile Co- ers, based on the deposits for the last
been decided to extend the phase-in
operative Bank, Bajirao Appa Sahakari four years, sources said. "In this case,
time for achievement of the targets by
Bank, Sawantwadi Urban Co-operative the bank did not disclose the interest
two years, i.e. upto March 31, 2026"
Bank and Shri Laxmi Sahakari Bank. paid to the customers. It has come to Governor Shaktikanta Das said in his
our notice that there may be a loss of
The central bank imposed a penalty of monetary policy statement. "Further,
about Rs 1.5 crore every year." they
Rs 1 lakh each on Kokan Mercantile Co- suitable incentives shall be provided to
said.
operative Bank and Shri Laxmi UCBs that have met the prescribed tar-
Sahakari Bank. It imposed Rs 2 lakh and A 10-member team of the department gets as on March 31, 2023".
22 | 2023 | JULY | BANKING FINANCE