RBI imposes monetary penalty on three Co-operative Banks

The Reserve Bank has imposed a whopping total of 1 cr 21 lakh rupees in penalties on 3 cooperative banks in Odisha, Hyderabad and Maharashtra for violation of RBI directions.

As announced on Monday, RBI has imposed penalties on 3 cooperative banks namely- The Urban Co-operative Bank Ltd, Rourkela, Andhra Pradesh Mahesh Co-operative Urban Bank Ltd, Hyderabad and the Dombivli Nagari Sahakari Bank Ltd, Dombivli.

On June 9, the Urban Co-operative Bank Limited, Rourkela received a penalty of 6 lakh rupees for contravention of the directions for KYC and Maintenance of Deposit Accounts.

The bank failed to ensure appropriate Customer Due Diligence. It did not obtain necessary documents regarding nature and proof of business, follow proper instructions for customer identification during transactions in accounts without confirming local address of constituents. It also failed to adhere to instructions pertaining to the issue of cheque books.

The Andhra Pradesh Mahesh Co-operative Urban Bank Ltd, Hyderabad has been charged with a penalty of 65 lakh rupees for failure to comply with RBI directions on the Basic and Comprehensive Cyber Security Framework for UCBs.

The Dombivli Nagari Sahakari Bank Limited, Dombivli faced a heavy fine of 50 lakh rupees on account of the same.

Among other things, the banks failed to put certain mandated controls in place, which led to cyber security incidents. RBI charged both the banks with non-compliance of RBI directions on 12 June, 2023.

The central bank asked the banks to explain why penalties should not be imposed for non-compliance with the directions. After the hearings, the aforesaid charges were imposed.