Page 18 - Banking Finance March 2021

CO-OPERATIVE BANK NEWS

Applicable to Cooperative Societies)." operative Bank Limited, Nashik imposition of monetary penalty," the
The regulator said the panel will because of the lender's present central bank said.
submit its report within three months liquidity position. It, however, added the penalty is based
of holding its first meeting. However, 99.89 per cent of the on the deficiencies in regulatory
The committee will also comprise Harsh depositors are fully covered by the compliance and "is not intended" to
Kumar Bhanwala, former chairman of Deposit Insurance and Credit pronounce upon the validity of any
Nabard; Mukund M Chitale, a Guarantee Corporation (DICGC) transaction or agreement entered into
chartered accountant; N C Muniyappa insurance scheme, the Reserve Bank by the bank with its customers.
and R. N. Joshi, retired Indian said in a statement.
Administrative Service (IAS) officers; M Three final bids received for
S Sriram, a professor at Indian Institute RBI imposes Rs 55 lakh Punjab and Maharashtra
of Management Bengaluru; Jyotindra M
Mehta, president of the National penalty on Pune-based Co-operative Bank
Federation of Urban Cooperative Banks Seva Vikas Cooperative resolution: RBI
and Credit Societies Ltd (Nafcub); and Bank Three investors have submitted their
Neeraj Nigam, chief general manager- final offers for resolution of crisis-ridden
in-charge from RBI's Department of The RBI said it has imposed aRs 55 Punjab and Maharashtra Co-operative
Regulation. lakh penalty on Pune-based Seva Vikas
Cooperative Bank Limited for non- (PMC) Bank and their evaluation is
As of March 2020, a set of 1,539 urban underway, RBI Governor Shaktikanta
compliance with certain directions,
cooperative banks held Rs. 5.01 trillion including for not ensuring end-use of Das said on Friday. Last month, the
in deposits and Rs. 3.05 trillion in funds lent. bank's administrator AK Dixit had said
advances. three investors were given time till
The penalty, it said, has been imposed
India's urban cooperative banks (UCBs) for non-compliance with certain February 1, 2021 for submissions of
were brought under the ambit of directions in the 'Master Circular - their final offer.
Banking Regulation (Amendment) Act, Management of Advances -UCBs' and "I have been informed that three final
2020 from 26 June 2020. offers have been received. I am given
'Master Circular - Income Recognition,
These powers may help RBI better Asset Classification, Provisioning and to understand that the PMC bank itself
regulate the sector and offer Other Related Matters - UCBs'. is evaluating the offers," the Governor
resolution to stressed lenders at a "The penalty has been imposed on the told reporters after announcing the
faster pace. Experts said that the vision bank...(i) for not ensuring end-use of monetary policy. He said once the
document slated to be submitted will funds lent (ii) non-adherence to IRAC evaluation is done, the bank would
go a long way in ensuring smoother norms and (iii) restructuring of loan approach RBI.
operations for cooperative banks. "I In September 2019, RBI had
accounts with retrospective effect on
have been requesting for a step like grounds not valid, revealed during a superseded the Board of PMC Bank
this and have written to the scrutiny of the bank conducted by RBI and placed it under various regulatory
government and also taken it up at RBI during 2019," it said. restrictions after detection of certain
board meetings," said Satish K financial irregularities, hiding and
Marathe, founder member of A notice was issued to Seva Vikas misreporting of loans given to real
SahakarBharati, an NGO in the Cooperative Bank advising it to show estate developer HDIL.
cooperative sector. cause as to why penalty should not be Its exposure to HDIL was over Rs.
imposed on it for such non-compliance
6,500 crore or 73% of its total loan
RBI restricts withdrawals with the directions. book size of Rs. 8,880 crore as of
from Independence Co- "After considering the bank's reply to September 19, 2019. Initially, the
the notice, RBI concluded that the restrictions, including withdrawal of
operative Bank, Nashik charge of non-compliance with deposits and fresh lending, were
The RBI has put restrictions on aforesaid RBI directions was imposed for six months but RBI has
withdrawals from Independence Co- substantiated and warranted been extending the curbs. T

18 | 2021 | MARCH | BANKING FINANCE