RBI imposes monetary penalty on 8 cooperative banks

The Reserve Bank of India (RBI) on January 24 imposed monetary penalties on eight cooperative banks for the violation of loan and know your customer norms.

These banks are Rajkot Peoples Cooperative Bank, Vasai Janata Sahakari Bank, Mogaveera Cooperative Bank, The Varachha Cooperative Bank, The Associate Cooperative Bank, Bhadradri Cooperative Urban Bank, The Jammu Central Co-operative Bank and Jodhpur Nagrik Sahakari Bank.

In most cases, the violations pertain to giving loans and advances to directors or related parties, overlooking know-your-customer norms and lending exposure guidelines.

The banking regulator periodically punishes erring cooperative banks for various violations. If violations continue, the central bank takes even stronger measures to safeguard the interest of depositors.

The RBI’s enforcement operation is conducted by the Enforcement Department. The RBI’s EFD was set up in April 2017 to separate enforcement action from teh supervisory process. EFD identifies actionable violations from inspection reports, risk assessment and scrutiny reports.

The penalty imposed is disclosed by the RBI in the form of a press release and by the regulated entity as per the disclosure norms. The regulated entity is required to pay the fine within the specified period.