Tag: Co-operative banks

Depositors of scandal-hit PMC Bank, 20 others to get up to Rs 5 lakh within 90 days, BFSI News, ET BFSI

Banking & Finance

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The Deposit Insurance and Credit Guarantee Corp will pay depositors of 21 insured banks, which includes scandal-hit PMC Bank, the amount equivalent to the deposits, up to a maximum of Rs 5 lakh, within 90 days.

Necessary instructions have been issued to the banks to submit the claims within 45 days after obtaining the approval from depositors to claim deposit insurance. The verification and settlement of the claims should be done by November 29, 2021, DICGC said in a a release.

These banks shall submit a claim list by October 15 and update the position as on November 29, with principal and interest, in a final updated list, which will enable DICGC to discharge its insurance liability in full as per norms.

Unpaid or the difference in amount of deposits up to Rs 5 lakh, as per final updated list, will be paid within 30 days of receipt, that is by December 29.

The Parliament in August passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill, 2021, ensuring account holders get up to Rs 5 lakh within 90 days of the RBI imposing a moratorium on the banks.

In 2019, the Reserve Bank of India imposed restrictions on PMC bank after observing financial irregularities, including under-reporting of bad loans. From the findings of the probe, it was discovered that Rs 250 crore worth of fake deposits were shown in the system, and that the bank had manipulated its net time and deposits using HDIL and DHFL cheques.

Here’s the list of the 21 banks:

> Adoor Co-Operative Urban Bank, Kerala
> Bidar Mahila Urban Co-Op Bank, Karnataka
> City Co-Op Bank, Maharashtra
> Hindu Co-Op Bank, Punjab
> Kapol Co-Op Bank, Maharashtra
> Maratha Sahakari Bank, Maharashtra
> Millath Co-Op Bank, Karnataka
> Needs of Life Co-Op Bank, Maharashtra
> Padmashree Dr. Vithal Rao Vikhe Patil, Maharashtra
> People’s Co-Op Bank, Kanpur, Uttar Pradesh
> Punjab & Maharashtra Co-Op Bank (PMC Bank), Maharashtra
> Rupee Co-Operative Bank, Maharashtra
> Shri Anand Coop Bank, Pune, Maharashtra
> Sikar Urban Co-Op Bank, Rajasthan
> Sri Gururaghvendra Sahakara Bank Niyamitha, Karnataka
> The Mudhol Co-Operative Bank, Karnataka
> Mantha Urban Cooperative Bank, Maharashtra
> Sarjeraodada Naik Shirala Sahakari Bank, Maharashtra
> Independence Cooperative Bank, Nashik, Maharashttra
> Deccan Urban Co-Operative Bank, Vijaypur, Karnataka
> Garha Co-Operative Bank, Guna, Madhya Pradesh

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RBI imposes Rs 50 lakh penalty on Bombay Mercantile Co-operative Bank, BFSI News, ET BFSI

Banking & Finance

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The Reserve Bank of India (RBI) on Friday said it has imposed a penalty of Rs 50 lakh on Bombay Mercantile Co-operative Bank, Mumbai for deficiency in regulatory compliance. The RBI has also imposed a penalty Rs 2 lakh on Akola District Central Co-operative Bank Limited, Akola (Maharashtra) for non-compliance with certain provisions of Know Your Customer (KYC) norms.

The penalty on Bombay Mercantile Co-operative Bank Ltd was imposed for non-compliance with directions contained in the Reserve Bank of India (Co-operative Banks – Interest Rate on Deposits) Directions, 2016 and specific directions under the Supervisory Action Framework (SAF), RBI said in a statement.

The statutory inspection of the bank conducted by RBI with reference to the bank’s financial position as on March 31, 2019, the inspection report pertaining thereto, and examination of all related correspondence revealed that it had offered interest rates on NRE deposits higher than those offered by it on comparable domestic rupee term deposits.

The bank had also sanctioned unsecured advances.

In another statement, the RBI said the inspection report of the Akola District Central Co-operative Bank based on its financial position as on March 31, 2019 and the inspection report pertaining thereto revealed that it had failed to put in place a robust system for alerts as part of effective identification and monitoring of suspicious transactions.

In both cases, the RBI said the penalties are based on deficiencies in regulatory compliance and not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.



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RBI imposes penalty on 2 co-operative banks, BFSI News, ET BFSI

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PUNE: The Reserve Bank of India (RBI) has imposed a penalty of Rs 2 lakh and Rs 3 lakh on the Pune-headquartered Muslim Cooperative Bank and the Jijamata Mahila Sahakari Bank, respectively.

The fine on the Muslim Cooperative Bank, the RBI said, was due to non-compliance to the mandatory KYC requirements for the account holders. The review dates back to the end of the 2018-19 fiscal.

“ The lapses in the KYC updation were found by the RBI in only a few out of the around 37,000 accounts that we have… As soon as we get the order, we will discuss it in the board and decide the course of action,” said PA Inamdar, the chairman of the Muslim Cooperative Bank.

The central bank said in its review, it found that the Jijamata Mahila Sahakari Bank had “not adhered” to the ceiling on advances to nominal members. “We will discuss the order in the bank’s board and decide on the future course of action,” said a spokesperson of the Jijamata Mahila Sahakari Bank.

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RBI proposes changes in fund raising norms of urban co-operative banks, BFSI News, ET BFSI

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The Reserve Bank of India (RBI) has proposed changes in rules for fundraising by primary (urban) co-operative banks. On Wednesday, the central bank released a draft circular for issue and regulation of share capital and securities of primary (urban) co-operative banks.

“UCBs are permitted to raise equity share capital, as hitherto, by way of issue of equity shares to persons within their area of operation enrolled as members, in accordance with the provisions of their bye-laws, and issue of additional equity shares to the existing members,” it said.

The RBI has proposed that any refund of share capital to members, or their nominees, should be subject to the certain conditions — the bank’s capital adequacy ratio is 9 per cent or above, both as per the latest audited financial statements and the last CRAR as assessed by the RBI during statutory inspection.

Such refund should not result in the bank’s capital adequacy falling below regulatory minimum of 9 per cent. The RBI has directed cooperative banks to ensure their investors are educated on the risk characteristics of regulatory capital requirements.

It has also asked cooperative banks to have a specific sign-off from the investors to ensure they have understood the features and risks of the instruments. The urban co-operative banks have been asked to not benchmark floating rate instruments to the fixed deposit rate.



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RBI penalises three Maharashtra-based co-operative banks, BFSI News, ET BFSI

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The Reserve Bank of India on Wednesday imposed a total penalty of Rs 8 lakh on three Maharashtra-based co-operative banks for deficiencies in regulatory compliance. A penalty of Rs 4 lakh has been imposed on Excellent Co-operative Bank, Mumbai, and Rs 2 lakh each on Janseva Sahakari Bank Limited, Pune and The Ajara Urban Co-operative Bank, Ajara (Kolhapur).

The penalty on Excellent Co-operative Bank was imposed for contravention of the directions issued by RBI on ‘Maintenance of Deposit Accounts’ and ‘Know Your Customer (KYC)’.

Janseva Sahakari Bank was fined for contravention of the direction issued by on KYC.

The central bank said the penalty on The Ajara Urban Co-operative Bank has been imposed for contravention of direction on ‘Maintenance of Deposit Accounts’.

The RBI said the penalty was imposed on the three lenders based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by them with their customers.

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