RBI New Order: The Reserve Bank of India (RBI) on Monday said District Central Cooperative Banks (DCCBs) can close their unprofitable branches without prior permission of the central bank.
Central Reserve Bank has imposed penalty on 5 co-operative banks. These co-operative banks are- Uma Co-operative Bank Limited, Peez People’s Co-operative Bank Limited, Mizoram Co-operative Apex Bank Limited, Birbhum District Central Co-operative Bank Limited and Shihori Nagrik Co-operative Bank Limited. All these banks have been accused of violating rules. However, this will not have any impact on customers.
How much penalty on which bank?
The Reserve Bank has imposed a monetary penalty of ₹7 lakh on Uma Co-operative Bank Ltd for violation of directions issued by RBI on holding of deposits by primary (urban) co-operative banks (UCBs) with other banks. This bank is located in Vadodara, Gujarat. Apart from this, the Reserve Bank imposed a monetary penalty of ₹2 lakh on Peasant People’s Co-operative Bank Limited. This bank has been held guilty for not complying with the instructions issued by RBI on KYC Guidelines, 2016.
The Reserve Bank imposed a fine of ₹2 lakh on Mizoram Co-operative Apex Bank Ltd, Aizawl for non-compliance with the directions issued by RBI on ‘Housing Finance’ applicable to state co-operative banks. Similarly, a fine of ₹1.10 lakh has been imposed on Birbhum District Central Co-operative Bank Ltd. RBI imposed monetary penalty of ₹1 lakh on Shihori Nagrik Sahakari Bank Ltd.
Criteria for closing DCCB branches fixed
Meanwhile, the Reserve Bank has said that District Central Cooperative Banks (DCCBs) can close their unprofitable branches without prior permission of the central bank. However, for this they will have to take approval from the Registrar of Cooperative Societies of the concerned state.
The Reserve Bank in a circular said the decision to close unprofitable branches should be taken keeping in mind appropriate factors and the minutes of the meeting of the board of directors of DCCBs in this regard should be properly recorded. As per RBI, the bank should inform all the existing depositors/customers two months in advance through a press release in local leading newspapers before closing the branch. However, RBI said that if restrictions have been imposed on any bank then that DCCB will not be allowed to close branches.
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