After giving relief to Kotak Mahindra Bank, RBI has imposed a ban on another bank. Monetary penalty has also been imposed on 5 banks. Let’s know why the central bank took this step?
The Reserve Bank of India (RBI) has once again taken strict action in the interest of the customers. Monetary penalty has been imposed on five cooperative banks. Out of these, 3 banks are located in Tamil Nadu. One is located in Gujarat and one in Maharashtra. A ban has also been imposed on one bank. Which will affect the customers. Kotak Mahindra Bank has also got relief, now the bank can issue new credit cards. It can also onboard new customers through online and mobile banking channels.
The Reserve Bank of India has imposed a fine of Rs 1.50 lakh on The Tiruppur Co-operative Urban Bank Limited located in Tamil Nadu, Rs 50,000 on The Ramanathapuram Co-operative Urban Bank Limited and Rs 1.75 lakh on The Salem Urban Co-operative Bank Limited. These three banks have violated the rules related to KYC. At the same time, a fine of Rs 50 thousand has been imposed on The Mumbai Municipal Corporation Education Department Sahakari Bank Limited and Rs 2 lakh on Sulaimani Co-operative Bank Limited located in Vadodara, Gujarat.
Banks violated these rules
The Salem Co-operative Bank Limited sanctioned loans related to the director. Secured advances have been sanctioned beyond the prescribed limit. Apart from this, the KYC records of the customers were also not uploaded on the Central KYC Record Registry within the prescribed time.
The Tiruppur Co-operative Urban Bank Limited failed to comply with the prudential inter-bank (gross) exposure limit. The KYC records of the customers were not uploaded on the Central KYC Record Registry within the prescribed time.
The Ramanathapuram Co-operative Urban Bank Limited failed to upload the KYC records of the customers on the Central KYC Record Registry within the prescribed time.
The Mumbai Mahanagar Palika Shikshan Vibhag Sahakari Bank Limited failed to conduct a periodic review of the risk classification of accounts at least in 6 months.
Sulaimani Co-operative Bank Limited has not complied with the prudential inter-bank (gross) exposure limit. Offered fixed deposits for a minimum period, which was not as per the prescribed period. Apart from this, some savings deposit accounts were also opened in the name of ineligible institutions.
Restrictions imposed on this bank
The New India Co-operative Bank Ltd. has been imposed restrictions by RBI. This bank will not be allowed to grant or renew any loan or advance without the prior written approval of the Reserve Bank. It will also not be allowed to incur any dues including any investment, borrowing or acceptance of new deposits. It will not be able to disburse or agree to disburse any payment. It will also not be allowed to enter into any compromise or arrangement. Restrictions have also been imposed on selling, transferring and disposing of assets. RBI has taken this step keeping in view the current liquidity position of the bank. However, loan setoff against deposits is allowed. The bank can incur expenditure in respect of salary, rent, electricity bill etc. of employees. This has been done to protect the interest of the depositors of the bank and to meet the concerns arising due to the recent physical developments in the bank. Every eligible depositor will be entitled to receive deposit insurance claim amount of the deposit up to a monetary limit of Rs 5 lakh from DICGC. The license of the bank has not been cancelled yet. This ban will be in place for the next 6 months and any decision will be taken only after review.
