RBI, the father of the bank, has penalized the three cooperative banks running at different levels in the states. RBI has the full authority to impose penalties and charge the amount if any financial institution or bank does not follow the basic Guidelines. Three banks did not follow the regulations of the rules made by the RBI.
Penalties Imposed on Banks: Lists
1. The Mumbai District Central Co-operative Bank Ltd., Maharashtra
RBI imposed a 2 Lakh rupee penalty against this bank under Section 20 of the Banking Regulation Act, 1949. This section prohibits banks from granting loans to their own directors or related parties, a critical safeguard to prevent conflict of interest and misuse of funds. Banks avoided following Section 20.
2. The Karaikudi Co-operative Town Bank Ltd., Tamil Nadu
This is the most popular bank in Tamil Nadu and provides several financial services to its clients. A penalty amount of ₹1.5 lakh was imposed for non-compliance with the RBI’s directives. This bank did not follow the latest rules and regulations of the RBI. This bank did not follow the KYC rules for the customer. These norms are essential for maintaining financial health and preventing money laundering within the cooperative banking system.
3. District Co-operative Central Bank Ltd., Eluru, Andhra Pradesh
For this bank RBI imposed 50 thousand on the District Co-operative Central Bank Ltd., Eluru, Andhra Pradesh. The penalty was taken under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.