monetary penalties on banks

RBI has vide two separate circulars levied fines of Rs.50,000/- on Alavi Co-operative Bank Limited, Gujarat for contravention of RBI directions on ‘Loans and Advances to Directors, Relatives and Firms/Concerns in which they are Interested’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.

Another fine of Rs.1 lakh on The Mandvi Mercantile Co-operative Bank Limited, Mandvi, Kutch, Gujarat for the same non compliance.  Additional fine on the Mandvi bank due to non compliance with ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’.

Since there are systemic issues with these co-operative banks, its high time that RBI in collaboration with ICSI puts some system in place to beef up the compliances in these banks. Company Secretaries can be appointed on retainership/ contractual basis to take care of their compliances.

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