RBI imposes penalty on two co-op banks

The Reserve Bank of India (RBI) on Thursday imposed monetary penalty on two cooperative banks in Gujarat for allegedly violating various provisions of the Banking Regulation Act, 1949.

RBI imposed a monetary penalty of Rs 5 lakh on the Rajkot Nagarik Sahakari Bank Ltd, Rajkot, and Rs 2 lakh on the Gandhidham Mercantile Co-operative Bank Ltd, Kutch, according to a statement posted on RBI's website.

The Rajkot-based cooperative bank was penalised under provisions of Section 47A (1)(b) of the Banking Regulation Act, 1949, for violations relating to income recognition and asset classification norms. According to a statement posted on the regulator's website, the bank had also violated Know Your Customer (KYC) norms.

The Gandhidham-based co-operative bank was penalised Rs 2 lakh for violation of operational instructions issued under Section 36(1) of the Banking Regulation Act, 1949.

RBI had issued a showcause notice to the bank in response to which the bank submitted a written reply. After considering the facts of the case and the bank's reply, the central bank concluded that the violation was substantiated and warranted imposition of penalty.