RBI imposed heavy fine on 3 banks and one company, accused of violation of rules

RBI Action: The Reserve Bank of India has taken strict action against Maxvalue Credit and Investments Limited (Trishul Kerala) as well as three co-operative banks for not properly following the rules. Monetary penalty has been imposed on them. RBI gave this information through a press release on Thursday.

RBI has imposed a fine of Rs 2 lakh on Periyakulam Co-operative Urban Bank Limited (Tamil Nadu). A fine of Rs 1 lakh has been imposed on Kanara District Central Co-operative Bank Limited (Karnataka) and Rs 50 thousand on Raichur District Central Co-operative Bank Limited (Karnataka). At the same time, the Central Bank has imposed a fine of Rs 4.50 lakh on Maxvalue Credit and Investment Limited.

The company violated many rules

MaxValue Credit & Investment Limited failed to obtain prior written permission from RBI for change in share holding by more than 26 per cent of its paid-up equity capital. Subordinated loans redeemed without RBI consent. Despite being a non-deposit taking NBFC, it used public deposits in the form of subordinated loans or non-convertible debentures. Furthermore, it also failed to make certain disclosures in the annual financial statements.

Banks could not follow these rules

Periyakulam Co-operative Urban Bank Limited sanctioned loans beyond the single borrower exposure limit. Loans and advances sanctioned with risk weighting above 100%. Offered interest rates higher than those offered by SBI in violation of the instructions issued under SAF. Share capital returned to members despite CRAR being less than the regulatory minimum of 90%. Share linking norms were also not followed in respect of jewelery loans. Kanara District Central Co-operative Bank Limited and Raichur District Central Co-operative Bank Limited sanctioned loans to directors or persons related to them.