RBI imposes penalty on cooperative banks for reporting fraud cases with delay, other irregularities

The Reserve Bank of India (RBI) has imposed monetary penalties on several banks for non-compliance with directions issued by the RBI on a wide range of issues ranging from reporting fraud cases with delay, opening savings bank accounts of ineligible trusts and extension of loans to its directors.

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A monetary penalty of ₹48.30 lakh has been imposed by the RBI on the Nasik Merchant’s Co-operative Bank for noncompliance with the directions issued by RBI related to ‘frauds in UCBs: changes in monitoring and reporting mechanism’ and on ‘maintenance of deposit accounts’. A statutory inspection of the bank was conducted by RBI with reference to its financial position as on 31 March, 2021, and an examination carried out of the risk asessment report, inspection report and all correspondence related it.

The inquiry revealed that the bank had reported fraud cases with delay, levied penal charges for non-maintenance of minimum balances in dormant/inoperative savings bank accounts and levied penal charges for nonmaintenance of minimum balances in SB accounts without notifying the customers. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the RBI directions.