RBI penalizes two Gujarat based co-perative banks

Ahmedabad, 15 January 2014

RBI penalises Rajkot Nagarik Sahakari Bank Ltd., Rajkot (Gujarat)

The Reserve Bank of India has imposed a monetary penalty of `5.00 lakh (Rupees Five Lakh) on the Rajkot Nagarik Sahakari Bank Ltd., Rajkot (Gujarat), in exercise of the powers vested in it under the provisions of Section 47A (1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies), for violations relating to income recognition and asset classification norms, violation of Section 6 (1) (j) of the Act, non compliance to the instructions in respect of issuance of Demand Draft/Postal Order against cash, non adherence to Know Your Customer norms and persistence of certain deficiencies pointed out in earlier inspection reports.

The Reserve Bank of India had issued a Show Cause Notice to the bank based on the finding of inspection for the financial position as on March 31, 2012. In response, the bank submitted a written reply and made personal submission to the Regional Director, Reserve Bank of India, Ahmedabad. After considering the facts of the case and the bank’s reply in the matter, the Reserve Bank came to the conclusion that the violations were substantiated and warranted imposition of the penalty.

The Gandhidham Mercantile Co-operative Bank Ltd, Dist Kutch (Gujarat) – Penalised

The Reserve Bank of India has imposed a monetary penalty of `2.00 lakh (Rupees Two Lakh only) on The Gandhidham Mercantile Co-operative Bank Ltd, Dist. Kutch (Gujarat), in exercise of the powers vested on it under the provisions of Section 47A (1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) for violation of operational instructions issued under Section 36(1) of B.R. Act, 1949 (AACS).

The Reserve Bank of India had issued a Show Cause Notice to the bank in response to which the bank submitted a written reply. After considering the facts of the case, the bank’s reply and also personal submission in the matter, RBI came to the conclusion that the violation was substantiated and warranted imposition of penalty.