Reserve Financial institution of India Imposes Rs 15 Lakh Penalty on Two Co-operative Banks

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A penalty of Rs 10 lakh has been imposed on Millath Co-operative Financial institution for “non-adherence/violation of all inclusive instructions and different instructions imposed on the financial institution”, the Reserve Financial institution of India (RBI) stated in a press release.

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  • Final Up to date: November 04, 2020, 23:34 IST
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The RBI on Wednesday stated it has imposed penalty totalling Rs 15 lakh on two co-operative banks, together with Millath Co-operative Financial institution, Davangere (Karnataka) for non-compliance with instructions issued by it. A penalty of Rs 10 lakh has been imposed on Millath Co-operative Financial institution for “non-adherence/violation of all inclusive instructions and different instructions imposed on the financial institution”, the Reserve Financial institution of India (RBI) stated in a press release.

In one other assertion, it stated a financial penalty of Rs 5 lakh has been imposed on The Thiruvaikuntam Co-operative City Financial institution Restricted, Thoothukudi (Tamil Nadu) for contravention of the instructions issued by RBI on prohibition of loans and advances to administrators. In each instances, the penalty has been imposed based mostly on deficiencies in regulatory compliance and isn’t meant to pronounce upon the validity of any transaction or settlement entered into by the banks with their clients, it stated.

RBI stated the inspection report of Millath Co-operative Financial institution, based mostly on its monetary place as on March 31, 2019, revealed inter alia, violation/non-compliance with the instructions on allowing of withdrawals in extra of the stipulated quantity and sanctioning of contemporary loans and advances in violation of instructions issued beneath Supervisory Motion Framework (SAF). In the meantime, the inspection report of The Thiruvaikuntam Co-Operative City Financial institution, based mostly on its monetary place as on March 31, 2019, revealed that the financial institution had sanctioned loans to its administrators in contravention with the instructions issued by RBI on this regard.

Notices have been issued to each the banks. After contemplating their replies and oral submissions made through the private listening to, RBI got here to the conclusion that the costs of non-compliance with instructions have been substantiated and warranted imposition of financial penalty.