RBI imposes monetary penalty on two co-operative banks

The Reserve Bank today imposed monetary penalty on two co-operative banks in Gujarat for allegedly violating various provisions of the Banking Regulation Act, 1949.

The 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 the RBI's website.

The Rajkot-based co-operative 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.

The RBI had issued a show cause 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 RBI concluded that the violation was substantiated and warranted imposition of penalty.