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The Reserve Bank of India (RBI) penalised 16 cooperative banks in Gujarat this month for regulatory non-compliance. The penalised banks include those that have sanctioned loans to relatives of their own directors.
Among the five cooperative banks from the state that were penalised on Thursday, two — Chappi Nagrik Sahakari Bank Ltd, Banaskantha and People’s Cooperative Bank Ltd, Dholka — were found sanctioning loans to relatives of their own directors.
On October 3, the central bank had imposed similar monetary penalties on Dhanera Mercantile Cooperative Bank Ltd of Dhanera, and Sarvodaya Sahakari Bank Ltd of Modasa and Janata Cooperative Bank Ltd of Godhra for sanctioning credit facilities to its directors or their relatives. The RBI also noticed that the relatives of the directors of the banks stood as guarantors for loans sanctioned by all three banks.
However, the central bank has not named the directors involved or specified the amount of loans sanctioned. As far as Janata Cooperative Bank Ltd was concerned, the RBI also found that the bank had made a donation to a trust where one of its directors was a trustee.
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During October, the RBI also imposed monetary penalties on Vadnagar Nagrik Sahakari Bank Ltd, Vadnagar, Nagrik Sahakari Bank Ltd, Babra, Sevalia Urban Cooperative Bank Ltd, Makarpura Industrial Estate Cooperative Bank Ltd of Vadodara and Karnavati Cooperative Bank Ltd, Ahmedabad for sanctioning loans where relatives of directors of the banks stood as guarantors.
The penalties imposed ranged between Rs 50,000 to Rs 6 lakh in most cases.
Other non-compliance noticed by the RBI in these 16 cooperative banks include non-payment of interest on overdue term deposits, breaching inter-bank gross and counterparty exposure limits
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