The Reserve Bank of India (RBI) has imposed a monetary penalty on eight banks and cancelled the licences of two non-banking finance companies (NBFCs). Additionally, the RBI has also imposed a monetary penalty on an NBFC. The monetary penalty imposed on these banks ranges from ₹1 lakh to ₹2.3 crore.

The banks that received the RBI penalty are -- Chhattisgarh Rajya Sahakari Bank, Raipur, The Goa State Co-operative Bank Ltd., Panaji, Garha Co-operative Bank Limited, Guna (M.P.), The Yavatmal Urban Co-operative Bank Limited, Yavatmal (Maharashtra), Jila Sahakari Kendriya Bank Maryadit, Chhindwara (M.P.), Warud Urban Co-operative Bank Ltd., Warud (Maharashtra), Indapur Urban Cooperative Bank Ltd., Indapur, Maharashtra, and The Mehsana Urban Co-operative Bank Ltd., Mehsana, Gujarat.

Spandana Sphoorty Financial

The RBI imposed a financial penalty of ₹2.33 crore on the NBFC. The RBI says its examination of the risk assessment report, inspection reports, and supervisory letters revealed the NBFC failed to adhere to the pricing of credit guidelines for the NBFCs. A notice was issued to the company and after receiving its response, the RBI came to the conclusion that the charge of non-compliance was substantiated and warranted the imposition of the monetary penalty.

RBI cancels licences of 2 NBFCs

The RBI has cancelled the licences of two NBFCs -- Alarming Finvest Private Limited, Delhi, and Achal Finance Limited, Karnataka. After the RBI order, these NBFCs will not transact the business of a non-banking financial institution, says the RBI order.

Chhattisgarh Rajya Sahakari Bank

The RBI imposed a monetary penalty of ₹25 lakh on the bank for non-compliance with certain KYC (Know Your Customer) provisions. The action came after the RBI found deficiencies in regulatory compliance.

In the statutory inspection of the bank conducted by NABARD over the bank’s financial position as of March 31, 2020, the Inspection Report found the bank failed to put in place a system of periodic review of risk categorisation of customers.

The Goa State Co-operative Bank

The RBI imposed a ₹2.51 lakh penalty on the bank for non-compliance with section 9 read with section 56 of the Banking Regulation Act, 1949. The action was taken after deficiencies were found in regulatory compliance. The bank failed to dispose off the non-banking asset within the set timeline, says the RBI.

Garha Co-operative Bank

In the case of Garha Co-operative Bank, the RBI imposed a penalty of ₹1 lakh on the bank for non-compliance with the directions issued by the RBI to urban cooperative banks on Income Recognition and Asset Classification (IRAC).

The Yavatmal Urban Co-operative Bank

The RBI imposed a monetary penalty of ₹3.50 lakh on the bank for non-compliance with the RBI's KYC norms. The RBI says the bank had not carried out periodic updation of KYC of its customers and no system of periodic review of risk categorisation of accounts was done.

Jila Sahakari Kendriya Bank

The RBI has imposed a monetary penalty of ₹1 lakh on Jila Sahakari Kendriya Bank for non-compliance with the provisions of the Banking Regulation Act, 1949, and directions issued by the Reserve Bank of India (RBI) on Know Your Customer (KYC).

The bank had delayed the submission of statutory/OSS returns to RBI and NABARD, had not carried out a periodic review of risk categorisation of its customers and not carried out periodic updation of KYC of its customers.

Warud Urban Co-operative Bank

The RBI imposed a monetary penalty of ₹1 lakh on the bank for contravention of exposure norms and KYC norms. The RBI said the bank had not complied with the prudential inter-bank counterparty limit and had not put in place robust software for effective identification and reporting of suspicious transactions.

Indapur Urban Cooperative Bank

The bank will pay a penalty of ₹7 lakh for the violation of exposure norms and other restrictions. The bank had granted unsecured advances in breach of the aggregate ceiling for such advances, applicable to it. The RBI action came after a show-cause notice was issued to the bank asking why a penalty should not be imposed on it.

The Mehsana Urban Co-operative Bank

The RBI said the bank will have to pay ₹40 lakh for the violations of Co-operative Banks - Interest Rate on Deposits Directions, 2016. The bank had failed to pay interest on term deposits, which matured on Sundays/holidays/non-business working days and were repaid on the next working day, for the intervening days. The bank also failed to pay interest on the balance amount lying in current accounts of deceased individual depositors/proprietorship concerns.

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