RBI announces closure of one bank along with fine on four others
No minimum balance charges on 'inoperative accounts': RBI
By: Pune Pulse
December 9, 2023
Pune: Five co-operative banks have faced severe consequences for violating the regulations set by the Reserve Bank of India (RBI). Among them, four banks have been fined by the RBI, while the license of one co-operative bank, namely Urban Co-operative Bank Limited, has been revoked. Urban Co-operative Bank Limited operates in Sitapur, Uttar Pradesh. According to the RBI, this particular co-operative bank has depleted all its capital for conducting operations and there is no prospect of future earnings. Consequently, the bank is being forced to shut down.
Following the intervention of the RBI, the Urban Cooperative Bank was compelled to cease its operations starting from December 7. Additionally, the RBI instructed the Commissioner and Registrar of Uttar Pradesh to take appropriate measures in order to close down the bank.
The RBI has stated that the bank has also failed to make complete payments to its customers. Fortunately, the majority of the bank’s customers will be able to recover almost the entirety of their deposited capital. The bank has announced that 98.32 per cent of its customers will receive a full refund of their funds.
It is worth noting that deposits up to Rs 5 lakh are insured, and 98.32 per cent of the bank’s customers have deposits of Rs 5 lakh or less.
Four co-operative banks have been fined by the Reserve Bank of India. The banks that have been penalized are Patan Co-operative Bank, Rajarshi Shahu Co-operative Bank, District Central Bank and Primary Teachers Co-operative Bank. Among these four banks, three of them have been fined Rs 1 lakh each, while the remaining bank has been fined Rs 10,000.
The District Central Bank failed to adhere to the guidelines set by NABARD. Simultaneously, Patan Co-operative Bank disregarded the KYC rules. Shikshak Co-operative Bank granted gold loans in violation of RBI regulations, while Rajarshi Shahu Co-operative Bank neglected the minimum balance requirements.
