Mumbai: The Reserve Bank of India (RBI) on Thursday announced that it has imposed monetary penalties on several cooperative banks in Gujarat for non-compliance with regulatory guidelines. The Amod Nagric Co-operative Bank Ltd. in Amod, Bharuch district; The Karjan Nagarik Sahakari Bank Limited in Karjan, Vadodara district; and The Rajula Nagrik Sahakari Bank Ltd. in Rajula, Amreli district were each fined for failing to adhere to prescribed norms. Additionally, The Vijay Commercial Co-operative Bank Ltd. in Rajkot has also been penalized by the RBI.

In its release, the apex bank stated that by an order dated November 13, 2024, it imposed a monetary penalty of ₹1.00 lakh (Rupees One Lakh only) on The Amod Nagric Co-operative Bank Ltd., Amod, Dist. Bharuch, Gujarat, for non-compliance with RBI directions on ‘Loans and Advances to directors, relatives, and firms/concerns in which they are interested’ and ‘Know Your Customer (KYC) norms.’

The bank had sanctioned loans to a relative of the bank’s director and also allowed the director’s relative to stand as a guarantor. Additionally, the bank failed to upload the KYC records of certain customer accounts to the Central KYC Records Registry within the prescribed timeline.

Another release from RBI states, “By an order dated November 15, 2024, RBI imposed a monetary penalty of ₹2.10 lakh (Rupees Two Lakh Ten Thousand only) on The Karjan Nagarik Sahakari Bank Limited, Karjan, Dist. Vadodara, Gujarat for contravention of provisions of sections 18 and 26A read with section 56 of the Banking Regulation Act, 1949 (BR Act) and non-compliance with certain directions issued by RBI on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks,’ ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs),’ and ‘Know Your Customer (KYC) norms.’”

The bank had failed to: i) transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund within the prescribed time; ii) maintain the minimum cash reserve ratio for certain days during the financial year 2021-22; iii) submit credit information of its borrowers to any of the four CICs as of March 31, 2023; iv) adhere to the prudential inter-bank counterparty exposure limit; and v) carry out risk-based periodic updates of KYC for certain customers as per the prescribed periodicity.

In the third case, The Reserve Bank of India (RBI) has, by an order dated November 13, 2024, imposed a monetary penalty of ₹1.25 lakh (Rupees One Lakh Twenty Five Thousand only) on The Rajula Nagrik Sahakari Bank Ltd., Rajula, Dist. Amreli, Gujarat, for non-compliance with certain directions issued by RBI on ‘Loans and Advances to directors, relatives, and firms/concerns in which they are interested’ and ‘Maintenance of Deposit Accounts—Primary (Urban) Co-operative Banks.’

The bank had sanctioned cash credit limits where relatives of the bank’s directors stood as guarantors and failed to classify certain accounts as inoperative or dormant after no customer-initiated transactions occurred for over two years.

In the fourth case, The Reserve Bank of India (RBI) has, by an order dated November 15, 2024, imposed a monetary penalty of ₹1.00 lakh (Rupees One Lakh only) on The Vijay Commercial Co-operative Bank Ltd., Rajkot, Gujarat, for non-compliance with certain directions issued by RBI on ‘Know Your Customer (KYC) norms.’ The bank failed to conduct periodic reviews of risk categorization for certain accounts at least once every six months.

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