The Reserve Bank of India (RBI) on Monday imposed a monetary penalty on three cooperative banks of Gujarat. Among the banks that have been fined for deficiencies in regulatory compliance are Co-operative Bank of Rajkot Ltd, Gandhidham Mercantile Co-operative Bank Ltd, and Meghraj Nagarik Sahakari Bank Ltd.
The highest fine of Rs 2 lakh has been imposed on the Co-operative Bank of Rajkot, while the rest two have been fined Rs 25000 (Meghraj Nagarik) and Rs 50000 (Gandhidham Mercantile).
For the Co-operative Bank of Rajkot, the RBI said that the bank had not transferred balances lying in certain accounts remaining unclaimed for more than ten years to the Depositor Education and Awareness Fund, resulting in contravention of some provisions of the Banking Regulation Act, 1949.
Based on the same, a notice was issued to the bank advising it to show cause as to why a penalty should not be imposed for non-compliance with the directions issued by the RBI. After considering the bank’s reply, the bank regulator came to the conclusion that the charge was substantiated and warranted the imposition of a monetary penalty.
In the case of Kutch-based Gandhidham Mercantile Co-operative Bank, the RBI found that the bank had sanctioned a loan wherein a relative of its director had interest and the director’s relative stood as guarantor.
Similar violations were found in the case of the third bank, Meghraj Nagarik. “…the bank had sanctioned six loans, wherein directors’ relatives stood as surety/guarantors, resulting in contravention of the direction issued by RBI,” the bank regulator said.
