Page 17 - Banking Finance February 2022

CO-OPERATIVE BANK NEWS

Co-Operative Bank News

RBI imposes restrictions for six months and are subject to re- conducted by the Enforcement De-
view. partment. The RBI's EFD was set up in
on Indian Mercantile Co- April 2017 to separate enforcement

operative Bank Ltd RBI imposes monetary action from teh supervisory process.
The Reserve Bank said it has imposed penalty on 8 cooperative EFD identifies actionable violations
several restrictions on Indian Mercan- from inspection reports, risk assess-
tile Cooperative Bank Ltd, Lucknow, banks ment and scrutiny reports.
including a cap of Rs 1 lakh on with- The Reserve Bank of India (RBI) on
drawals. January 24 imposed monetary penal- PMC Bank, Unity Small Fi-
ties on eight cooperative banks for the nance Bank merger awaits
The restrictions came into force re-
cently. In a statement, RBI said the violation of loan and know your cus- govt approval
Lucknow-based co-operative bank will tomer norms.
not, without its prior approval, grant These banks are Rajkot Peoples Coop- The proposed merger of debt-ridden
or renew any loans and advances, or erative Bank, Vasai Janata Sahakari Punjab and Maharashtra Cooperative
make any investment. Bank, Mogaveera Cooperative Bank, Bank with Unity Small Finance Bank
(USFB) is being examined and the pro-
"In particular, a sum not exceeding Rs The Varachha Cooperative Bank, The cess of amalgamation will start after
1 lakh of the total balance across all Associate Cooperative Bank, Bhadradri the government approval, sources
savings bank or current accounts or Cooperative Urban Bank, The Jammu said. Various aspects of the scheme of
any other account of a depositor, may Central Co-operative Bank and Jodhpur amalgamation have been examined,
be allowed to be withdrawn...", sub- Nagrik Sahakari Bank. and the government would soon send
ject to certain conditions, it added. In most cases, the violations pertain to its suggestions, if any, to the RBI,
The central bank, however, added the giving loans and advances to directors sources added.
directions should not per se be con- or related parties, overlooking know- The RBI in December extended the
strued as a cancellation of the banking your-customer norms and lending ex- restrictions on Punjab and
licence by the RBI. posure guidelines. Maharashtra Cooperative (PMC) Bank
"The bank will continue to undertake The banking regulator periodically for another three months till the end
banking business with restrictions till punishes erring cooperative banks for of March 2022, as all necessary process
further notification from RBI. The Re- various violations. If violations con- on the draft scheme for the takeover
serve Bank may consider modifications tinue, the central bank takes even was not complete.
of these Directions depending upon stronger measures to safeguard the As per the Banking Regulation Act, the
circumstances," it noted. interest of depositors. draft scheme of amalgamation is re-

The restrictions would remain in force The RBI's enforcement operation is quired to be placed before the govern-

BANKING FINANCE | FEBRUARY | 2022 | 17