The RBI has imposed penalties on four cooperative banks. This action has been taken strictly for violating rules. Some violated loan and other KYC guidelines. Let’s find out if your account is among them?
RBI Action: The Reserve Bank of India (RBI) has once again cracked down on banks violating rules. Four banks have been fined heavily. Two of these banks are located in Andhra Pradesh, while banks from Karnataka and Uttar Pradesh are also included in this list. The RBI announced this in a press release on its official website on Monday, November 24th.
The District Co-operative Central Bank Ltd., Kurnool, Andhra Pradesh, has been fined ₹1.50 lakh by the central bank for violating KYC and loan regulations. The bank sanctioned loans related to directors and failed to upload customer KYC records to a central KYC record registry within the stipulated timeframe. The District Co-operative Central Bank Ltd., Kakinada, has been fined ₹1 lakh for also sanctioning loans related to directors.
All banks were inspected by the National Bank for Agriculture and Rural Development (NABARD). This step was necessary to check the banks’ financial health. During the inspection, it was discovered that the banks were violating certain regulations. Consequently, show-cause notices were issued. Based on the responses received to the notices and the oral submissions made during the personal hearing, the decision to impose penalties was made.
This Karnataka Bank Has Been Penalized
Tumkur Grain Merchants Co-operative Bank Ltd., Karnataka, has been fined ₹1 lakh for approving new loans and advances with risk weights exceeding 100%. It offered interest rates on fixed deposits higher than the State Bank of India. It also approved credit facilities to sectors with high NPAs or defaults.
This Uttar Pradesh Bank Has Been Punished
The RBI has imposed a fine of ₹2 lakh on The Fatehpur District Co-operative Bank Ltd., Uttar Pradesh. A NABARD audit conducted on March 31, 2024, revealed deficiencies in compliance with guidelines. This action was taken after the allegations were confirmed. The bank failed to complete the KYC updates of its customers within the stipulated time. Furthermore, it failed to implement a system to periodically review the risk category of accounts, which is required to be done at least once every six months.
The RBI has clarified that this action will not impact any transactions or agreements between customers and banks. Therefore, if you have an account with any of the banks on this list, there is no need to worry. Customers can continue to transact as usual. Nor will this action impact any other RBI action in the future.
