Mumbai: The Reserve Bank of India (RBI) has recently imposed monetary penalties of Rs 7 lakhs on two cooperative banks in Gujarat for non-compliance with regulatory guidelines.

In the first case, by an order dated January 24, 2025, the RBI imposed a monetary penalty of ₹1.50 lakh on The Kheralu Nagrik Sahakari Bank Limited, Dist. Mehsana for non-compliance with directions issued by RBI on ‘Investment by Primary (Urban) Co-operative Banks’ and ‘Know Your Customer (KYC)’.

The bank had (1) breached the prescribed ceiling of total investments held under the Held to Maturity (HTM) category and (2) failed to carry out a periodic review of risk categorization of certain accounts at least once in six months.

In the second case, by an order dated January 23, 2025, the apex bank imposed a monetary penalty of ₹5.50 lakh on Marketyard Commercial Cooperative Bank Limited, Unjha, Dist. Mehsana, for non-compliance with certain directions issued by RBI on ‘Donations / Contributions for public /charitable purposes out of profits of UCBs’, ‘Donations to Trusts and Institutions where Directors, their relatives hold position or are interested’, ‘Loans and advances to directors, their relatives, and firms / concerns in which they are interested’ and ‘Know Your Customer (KYC)’.

The bank had: 1. made donations to trusts in excess of the prescribed ceiling; 2. made donations to certain trusts in which the bank’s directors were interested; 3. sanctioned certain director-related loans; and 4. failed to carry out a periodic review of risk categorization of certain accounts at least once in six months.

These actions followed statutory inspections conducted by the RBI, which assessed the financial positions of these banks as of March 31, 2023. DeshGujarat