RBI has taken strict action against 5 banks. Penalty has been imposed for violation of rules. The central bank has given this information on 14th August. Let us know whether this action will also increase the concern of the customers?
RBI Action: The Reserve Bank of India (RBI) has shown strictness against 5 banks in a single day. Heavy monetary penalty has been imposed for not complying with the rules properly. Four banks included in this list are located in Gujarat. At the same time, one bank is in Aurangabad, Maharashtra. RBI has given this information through a press release on August 14, a day before Independence Day.
A fine of Rs 2.50 lakh has been imposed on Shri Bharat Co-operative Bank Limited (Vadodara). A penalty of one lakh rupees has been imposed on Sarfadganj Mercantile Co-operative Bank Limited located in Patan. A fine of Rs 5 lakh has been imposed on Sarvodaya Commercial Co-operative Bank Limited located in Mehsana and Rs 1 lakh on The Uma Co-operative Bank Limited of Vadodara. RBI has imposed a fine of Rs 4.20 lakh on Maharashtra Gramin Bank located in Aurangabad.
Maharashtra Gramin Bank violated these rules
Maharashtra Gramin Bank delayed reporting some fraud cases to NABARD. It also failed to establish a system for periodic review of risk classification of accounts, with a periodicity of once in 6 months.
Why did Gujarat’s banks face trouble?
Shri Bharat Co-operative Bank did not establish a system of internal audit. It could not establish a system to continuously identify non-performing assets and classify some loans and advances as NPAs. Apart from this, it could not conduct a periodic review of the risk classification of some accounts, the periodicity of which was at least once in 6 months.
Sarfadganj Mercantile Bank had accepted some interest-free deposits in accounts other than current accounts.
Sarvodaya Commercial Co-operative Bank Limited violated several banking rules including KYC. It gave donations in excess of the profit-loss based regulatory limit. It failed to present its profits and assets in a correct and fair manner in the profit loss statement and balance sheet. Concurrent audit was conducted monthly instead of simultaneous scrutiny of transactions and the report was submitted late. The bank also failed to classify some non-performing assets in the appropriate NPA category. Apart from this, it could not conduct a periodic review of the risk classification of accounts.
The Uma Co-operative Bank Ltd failed to conduct internal audit from April 1, 2022 to March 31, 2024.
Notice was also issued to the banks
Before imposing penalty, the central bank conducted an inspection to check the financial status of all the banks. During this, non-compliance with the rules was revealed. After this, show cause notices were issued to all. On the basis of the response of the banks, the presentations given and the documents, it was decided to impose monetary penalty. RBI has taken this action due to non-compliance of banking rules. Its purpose is not to affect the transactions or agreements taking place between the customers and the bank.
