The Katihar District Central Co-operative Bank Limited, Bihar
Key Details
- Penalty Amount: ₹3.03 lakh (Rupees Three Lakh Three Thousand only).
- Reason for Penalty: Contravention of Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act) and non-compliance with RBI directions on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’.
- Inspection Date: The statutory inspection was conducted with reference to its financial position as of March 31, 2024.
- Inspecting Authority: National Bank for Agriculture and Rural Development (NABARD).
Root Cause Analysis (RCA)
The bank had sanctioned loans to its director. It also failed to submit credit information of its customers to two Credit Information Companies.
Preventive Controls
- Implement a robust system to ensure that no loans are sanctioned to directors, in compliance with the BR Act.
- Establish a reliable process to regularly and accurately submit credit information for all customers to Credit Information Companies.
Lesson Learned
Compliance with regulations regarding lending to directors and submitting credit information to CICs is crucial for maintaining transparency and preventing conflicts of interest.
Raiganj Central Co-operative Bank Limited, West Bengal
Key Details
- Penalty Amount: ₹3.10 lakh (Rupees Three Lakh Ten Thousand only).
- Reason for Penalty: Non-compliance with RBI directions on ‘Know Your Customer (KYC)’.
- Inspection Date: The statutory inspection was conducted with reference to its financial position as of March 31, 2024.
- Inspecting Authority: National Bank for Agriculture and Rural Development (NABARD).
Root Cause Analysis (RCA)
The bank failed to upload KYC records of customers to the Central KYC Records Registry (CKYCR) within the prescribed timeline. It also allotted multiple customer identification codes instead of a Unique Customer Identification Code (UCIC) for each customer.
Preventive Controls
- Develop and implement a system to ensure the timely uploading of all customer KYC records to the CKYCR.
- Enforce a policy to assign a single, unique customer identification code (UCIC) to each customer.
Lesson Learned
Adherence to KYC norms, including the timely and accurate submission of data to the CKYCR and the use of UCIC, is fundamental for regulatory compliance and customer identification18181818.
The Chanasma Nagrik Sahakari Bank Limited, Chanasma, Dist. Patan, Gujarat
Key Details
- Penalty Amount: ₹1 lakh (Rupees One Lakh only).
- Reason for Penalty: Non-compliance with RBI directions on ‘Customer Protection – Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions’.
- Inspection Date: The statutory inspection was conducted with reference to its financial position as of March 31, 2024.
- Inspecting Authority: Reserve Bank of India (RBI).
Root Cause Analysis (RCA)
The bank failed to provide customers with 24×7 access to report unauthorized electronic banking transactions through multiple channels. It also did not enable customers to instantly respond to SMS alerts to report such transactions.
Preventive Controls
- Create and maintain a 24×7 system that allows customers to report unauthorized transactions through various channels, such as phone, email, or a dedicated portal.
- Implement a system that enables customers to instantly notify the bank of any objection to electronic banking transactions by replying to SMS alerts.
Lesson Learned
Ensuring robust and accessible customer protection mechanisms for electronic banking transactions is critical for limiting customer liability and building trust.
Andaman & Nicobar State Co-operative Bank Limited
Key Details
- Penalty Amount: ₹16 lakh (Rupees Sixteen Lakh only).
- Reason for Penalty: Contravention of Section 26A read with Section 56 of the Banking Regulation Act, 1949 (BR Act) and non-compliance with directions on ‘Know Your Customer (KYC)’.
- Inspection Date: The statutory inspection was conducted with reference to its financial position as of March 31, 2024.
- Inspecting Authority: National Bank for Agriculture and Rural Development (NABARD).
Root Cause Analysis (RCA)
The bank failed to transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund within the prescribed time. It also failed to carry out a periodic review of the risk categorization of accounts at least once every six months.
Preventive Controls
- Automate the process of identifying and transferring unclaimed amounts to the Depositor Education and Awareness Fund in a timely manner.
- Implement a systematic and auditable process to ensure that the risk categorization of all accounts is reviewed at least twice a year, in compliance with regulations.
Lesson Learned
Timely transfer of unclaimed funds and regular review of risk categorization are essential for fulfilling statutory obligations and maintaining compliance with regulatory directives.