INDIA: The Reserve Bank of India (RBI) has imposed monetary penalties on four cooperative banks across the country for non-compliance with its different regulations, including Know Your Customer (KYC) directions.
The penalty has been imposed for contravention of the provisions of sections 24(3), 26, and 27(1) read with section 56 of the Banking Regulation Act, 1949 (BR Act) and the Banking Regulation (Cooperative Societies) Rules, 1966 (BR Rules);
The banks include the Bihar State Co-operative Bank Limited, Patna (Rs. 60.20 lakh), the Co-operative Bank of Rajkot Ltd., Rajkot (Gujarat) (Rs. 10 lakh), the Jowai Cooperative Urban Bank Limited, Meghalaya (Rs. 6 lakh only), and the Telangana State Co-operative Apex Bank Limited, Hyderabad (Rs. 2 lakh).
Bihar: The Bihar State Co-operative Bank failed to (i) put into use any robust software as a part of effective identification and reporting of suspicious transactions; (ii) submit statutory returns within prescribed timelines; (iii) submit off-site surveillance system returns within prescribed timelines; (iv) submit data to all the four Credit Information Companies; and (v) constitutes a Customer Service Committee of the Board, put in place a Customer Grievance Redressal Policy duly approved by the Board and maintain any register for complaints from its customers/constituents, the financial year 2019-20, as per the statutory inspection conducted by NABARD, the RBI statement issued on June 12 read.
Rajkot: The Co-operative Bank of Rajkot Ltd. (i) did not provide a direct link for lodging complaints with a specific option to report unauthorised electronic transactions on the home page of its website (ii) did not provide 24×7 access through multiple channels for reporting unauthorised electronic transactions that had taken place and/or loss or theft of payment instruments such as cards, etc. (iii) did not enable customers to instantly respond by “Reply” to the SMS and e-mail alert sent by the bank (b) used the abridged form of its name in social media posts on multiple occasions wherein the full name of the bank as appearing in the banking licence was not displayed prominently; (c) did not report a fraud case to RBI within the prescribed timeline, resulting in contravention of the aforesaid directions. These observations were made in the statutory inspection conducted by RBI on March 31, 2022.
Meghalaya: The Jowai Cooperative Urban Bank Limited, Meghalaya (i) breached inter-bank (gross) exposure limits and failed to carry out a periodic review of the risk categorization of its accounts.
Based on the same, a notice was issued to the bank, advising it to show cause as to why a penalty would not be imposed for non-compliance with the directions.
After considering the bank’s reply, the RBI concluded that the aforementioned charges of non-compliance with its directions were substantiated and warranted the imposition of a monetary penalty. These observations were made in the statutory inspection conducted by RBI on March 31, 2022.
Telangana: The Telangana State Cooperative Apex Bank Limited, Hyderabad, failed to transfer eligible amounts to the Depositor Education and Awareness Fund within the prescribed period.
In furtherance of the same, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed on it for failure to comply with the provisions of the statute and the directions issued thereunder, as stated therein.
After considering the bank’s reply to the notice and oral submissions made during the personal hearing, the RBI concluded that the charge of contravention of the aforesaid statutory provision was substantiated and warranted the imposition of a monetary penalty to the extent of non-compliance with such provision.
These observations were made in the statutory inspection of the bank conducted by NABARD concerning the bank’s financial position as of March 31, 2020.