Mumbai, December 30, 2024: The Reserve Bank of India (RBI) has imposed monetary penalties on four co-operative banks for non-compliance with regulatory norms. The central bank cited violations related to operational and prudential guidelines, raising concerns over the governance and adherence to prescribed standards in the co-operative banking sector.
The penalized banks are:
- Kolikata Mahila Co-operative Bank Limited
- The Prime Co-operative Bank Ltd., Surat
- The Yavatmal Urban Co-operative Bank Limited
- Kaithal Central Co-operative Bank Ltd., Haryana
According to the RBI, the penalties were imposed under provisions of the Banking Regulation Act, 1949, after careful examination of the banks’ compliance reports and inspection findings. Specific breaches included failure to adhere to Know Your Customer (KYC) norms, lapses in anti-money laundering (AML) measures, and non-compliance with asset classification and provisioning standards.
RBI’s Statement
In its official statement, the RBI emphasized, “The penalties are intended to strengthen compliance and ensure that banks operate within the regulatory framework to protect depositors’ interests.” The apex bank also clarified that these penalties are administrative in nature and do not question the validity of transactions undertaken by the penalized banks.
Sector Under Scrutiny
The co-operative banking sector has been under increasing scrutiny due to multiple instances of mismanagement and governance lapses. The RBI has been actively monitoring such institutions to safeguard the financial system’s integrity and enhance public confidence.
The penalized banks have been directed to take immediate corrective measures to rectify the identified deficiencies.
Implications
The move underscores RBI’s commitment to enforcing strict compliance and holding financial institutions accountable. Analysts suggest that this action will serve as a warning to other co-operative banks, urging them to prioritize regulatory adherence and operational transparency.
