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Key Points

The RBI has imposed fines on two co-operative banks for failing to follow regulatory guidelines. Shree Kadi Nagarik Bank was penalized ₹14.3 lakh for improper donations and loan monitoring issues. Saibaba Nagari Bank faced a ₹50,000 fine for KYC norm violations, including delayed record uploads. The central bank stressed these actions address compliance gaps without questioning transaction validity.

Key Points: RBI Fines Two Co-op Banks for KYC and Loan Violations

  • RBI fines Shree Kadi Nagarik Bank ₹14.3L for improper donations and loan monitoring
  • Saibaba Nagari Bank penalized ₹50K for KYC lapses
  • Violations detected during March 2024 inspections
  • RBI clarifies penalties don't invalidate customer transactions
2 min read

RBI imposes penalties on two co-operative banks for regulatory violations

RBI penalizes Shree Kadi Nagarik Sahakari Bank and Saibaba Nagari Sahakari Bank for regulatory lapses in KYC norms and loan monitoring.

"These penalties are based on regulatory compliance deficiencies and do not question transaction validity - RBI"

Mumbai, June 30

The Reserve Bank of India (RBI) has imposed monetary penalties on two co-operative banks for failing to comply with its regulatory directions.

In an order dated June 26, the RBI imposed a penalty of Rs 14.30 lakh on Shree Kadi Nagarik Sahakari Bank Limited, based in Mehsana district of Gujarat.

The action was taken for violations of RBI’s guidelines on donations to trusts and institutions where directors or their relatives have an interest, as well as on the management of advances by urban co-operative banks (UCBs).

According to the RBI, a statutory inspection of the bank was carried out based on its financial position as of March 31, 2024.

Following the inspection, the central bank found that the bank had made donations to a trust in which a relative of one of its directors was involved.

Additionally, the bank had failed to monitor the end-use of certain loans it had sanctioned.

After reviewing the bank's written reply and oral submissions, RBI concluded that the charges were valid and warranted a monetary penalty.

Separately, the RBI also imposed a penalty of Rs 50,000 on Saibaba Nagari Sahakari Bank Maryadit, located in Sailu, Maharashtra.

This penalty was announced through an order dated June 24. The action was taken for non-compliance with directions on Know Your Customer (KYC) norms.

The RBI found that the bank had failed to upload KYC records of some customers to the Central KYC Records Registry (CKYCR) within the specified timeframe.

It also did not carry out periodic updates of KYC for certain customers as per the required schedule.

These lapses came to light during a statutory inspection of the bank’s operations as of March 31, 2024.

The RBI clarified that both actions are based on deficiencies in regulatory compliance and are not intended to question the validity of any specific customer transactions or agreements.

The central bank also noted that these penalties do not prevent it from taking further action against the banks if needed.

- IANS

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Reader Comments

P
Priya S
As someone from Gujarat, I'm disappointed but not surprised. Many local banks here have "adjustment culture". RBI should conduct surprise audits more often. Hope this serves as warning to others.
A
Ananya R
The KYC violation is more concerning than donations issue. If banks aren't following basic customer verification, how can we trust them with our money? RBI should name and shame such banks publicly.
V
Vikram M
While penalties are necessary, RBI should also provide proper training to co-op bank staff. Many small town bankers aren't properly trained on these regulations. Punishment + education needed.
K
Kavya N
My father has account in one of these banks! Now I'm worried 😟 Should we move our money to nationalized banks? Are co-operative banks safe at all?
S
Siddharth J
The donation issue shows how directors misuse their positions. This is common in many small banks - giving loans or donations to relatives. RBI should ban such directors permanently from banking sector.

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