RBI imposed heavy fine on these 5 banks, accused of violation of rules

RBI action: The Reserve Bank of India has imposed huge monetary penalty on 5 co-operative banks for violating rules. RBI has also issued an order for action. Two banks included in this list are located in Karnataka. These banks are located in Bengaluru, Tamil Nadu and Kerala.

RBI has approved the approval of Shree Charan Souharda Cooperative Bank Limited (Bengaluru), Sri Ranganam Cooperative Urban Bank Limited (Tamil Nadu), Nilambur Cooperative Urban Bank Limited (Kerala), Manvi Pattana Souharda Cooperative Bank Niyamitha (Karnataka) and Sri Mahabaleshwar Cooperative Bank Limited (Karnataka). Action has been taken against. Some of these banks have violated SAS related rules and some have violated loan related rules.

RBI issued show cause notice (Reserve Bank of India)

During inspection, RBI found lapses in compliance with the rules. After which show cause notices were issued to all the banks. The central bank asked, “Why should they not be fined even if they do not follow the rules?” The decision to impose monetary penalty was taken only after the reply received on the notice and investigation.

Banks violated these rules (RBI monetary penalty)

• A fine of Rs 2 lakh has been imposed on Shri Charan Saudhar Co-operative Bank Limited. The Bank failed to classify certain loan accounts as non-performing assets in terms of income recognition asset classification and provisioning norms. Offered interest on deposits at interest rates higher than those offered by SBI. Sanctioning new loans and advances without following the instructions issued under SAF.
• RBI has imposed a fine of Rs 1,50,000 on Sri Ranganam Co-operative Urban Bank Limited. The bank sanctioned loans to relatives of directors. Also approved new loans and advances with exposure of more than 100% and extended credit facilities to sectors with high proportion of non-performing assets without following SAF instructions.
• A fine of Rs 50,000 has been imposed on Nilambur Co-operative Urban Bank Limited. The bank had made the donation without following the instructions issued under SAF.
• A fine of Rs 25,000 has been imposed on Manvi Patna Saudhar Sahakari Bank Niamitha. The bank did not follow the instructions issued under SAF and sanctioned loans and advances at interest rates higher than those charged by SBI.
• A fine of Rs 5 lakh has been imposed on Shri Mahabaleshwar Urban Co-operative Bank Limited. The bank had sanctioned several loans and advances to relatives of the directors.