RBI has imposed monetary penalty on 3 banks and one company. Let’s know why the central bank has taken this step?
RBI Action: The Reserve Bank of India has taken strict action against MaxValue Credit and Investments Limited (Trishul Kerala) as well as three cooperative banks for not complying with the rules properly. Monetary penalty has been imposed on them. RBI has given this information through a press release on Thursday.
RBI has imposed a fine of Rs 2 lakh on Periyakulam Co-operative Urban Bank Limited (Tamil Nadu). A fine of one lakh rupees has been imposed on Kanara District Central Cooperative Bank Limited (Karnataka) and 50 thousand rupees on Raichur District Central Cooperative Bank Limited (Karnataka). At the same time, the central bank has imposed a fine of Rs 4.50 lakh on MaxValue Credit and Investment Limited.
The company violated many rules
MaxValue Credit and Investment Limited failed to obtain prior written permission of RBI for change in share holding more than 26 percent of its paid-up equity capital. Redeemed subordinated loans without the consent of RBI. Despite being a non-deposit taking NBFC, it accessed public deposits in the form of subordinated loans or non-convertible debentures. Apart from this, it also failed to make certain disclosures in the annual financial statements.
Banks could not follow these rules
Periyakulam Co-operative Urban Bank Ltd sanctioned loans beyond the single borrower risk limit. Sanctioned loans and advances with risk weights in excess of 100%. Offered interest rates higher than those offered by SBI, in violation of directions issued under SAF. Returned share capital to members despite CRAR being below the regulatory minimum of 90%. Also did not follow share linking norms in respect of jewellery loans. Kanara District Central Cooperative Bank Ltd and Raichur District Central Cooperative Bank Ltd sanctioned loans to directors or persons related to them.
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