RBI imposes monetary penalty on Shree Chhani Nagarik Sahakari Bank Limited, Vadodara (Gujarat)

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 4.00 lakh on Shree Chhani Nagarik Sahakari Bank Limited, Vadodara (Gujarat) through an order dated March 29, 2023. The penalty was imposed for contravention of several RBI directions, including those on professionalisation of boards of urban co-operative banks, prudential income recognition/asset classification/provisioning norms, loans and advances to directors and sureties/guarantors, fraud monitoring and reporting in UCBs, and KYC direction requirements. RBI said its inspection and subsequent review found that the bank had purchased an employee insurance policy from a director who was also an insurance agent, had not identified NPAs on an ongoing basis, had sanctioned a loan with a director’s relative as surety/guarantor, had not reported five fraud cases within the prescribed timeline, and had not carried out periodic account updation as required. RBI clarified that the penalty was for regulatory non-compliance and not a judgment on customer transactions.