Reserve Bank of India: The RBI took this step in light of regulatory violations and deficiencies discovered during investigations. These include violations of housing finance regulations, KYC process errors, and cybersecurity lapses.
RBI Imposes Penalty: The Reserve Bank of India (RBI) periodically imposes penalties on banks for non-compliance with regulations. Now, once again, the RBI has taken action against several cooperative banks, imposing penalties. This action was taken by the RBI in light of violations of regulatory rules and deficiencies revealed during investigations. These deficiencies include violations of housing finance regulations, KYC process errors, and cybersecurity lapses. This action has been taken against a total of five banks under orders issued by the RBI.
Gayatri Co-operative Urban Bank receives the highest penalty
Gayatri Co-operative Urban Bank Limited of Jagtial, Telangana, has been imposed the highest penalty of ₹10 lakh. The bank has been accused of selling insurance products to customers without providing transparency and accurate information. This is a violation of RBI regulations. Additionally, a fine of ₹2 lakh has been imposed on Makarpura Industrial Estate Co-operative Bank Limited of Vadodara, Gujarat.
Investments in Housing Finance Exceeding the Permitted Limit
This bank failed to comply with KYC regulations and failed to fully implement the cybersecurity structure for urban cooperative banks. Similarly, South Kannada District Central Co-operative Bank in Karnataka was fined ₹1.5 lakh. The bank invested in housing finance beyond the permissible limit and also purchased shares of another cooperative institution, a violation of the Banking Regulatory Act.
These banks have been fined ₹50,000 each
Guntur District Co-operative Central Bank Limited in Andhra Pradesh and Tamil Nadu Circle Postal Co-operative Bank Limited in Tamil Nadu have been fined ₹50,000 each. Guntur Bank failed to upload customer KYC records to the central registry within the stipulated timeframe. Meanwhile, the Tamil Nadu bank accepted deposits at interest rates exceeding the permissible limit.
The RBI clarified that this action against banks is solely for violations of regulations. The penalties imposed for non-compliance will not affect transactions between customers and banks. Furthermore, the central bank stated that further steps may be taken in the future to ensure customer safety.
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