RBI getting tough against erring cooperative banks in West Bengal

RBI has issued a notification announcing monetary penalty of Rs 2,00,000 on two cooperative banks in West Bengal namely Boral Union Co-operative Bank and Khatra People’s Co-operative Bank. The central bank has also imposed a penalty of Rs 2,00,000 on Odisha-based Berhampur Co-operative Urban Bank.

Kolkata: The principal opposition parties had been vocal against the lack of transparency in the function of the cooperative banks in West Bengal for quite some time. Now their criticisms get more meat following a recent notice of the Reserve Bank of India (RBI) to impose penalties on two cooperative banks in West Bengal namely Boral Union Co-operative Bank and Khatra People’s Co-operative Bank. RBI officials claim that the apex bank had been monitoring the activities of the cooperative banks for quite some time and the latest notice is just the beginning of its action in this regard.

According to documents available with ETV Bharat, on December 4, 2020, RBI issued a notification announcing monetary penalty on these two banks after being found guilty of contravention and non-compliance with the directions issued by RBI on “Exposure Norms and Statutory/Other Restrictions-UCBs. RBI issued a penalty of Rs 2,00,000 on each of these two banks.

On the same day, the apex bank of the country also imposed a penalty of Rs 2,00,000 on Odisha-based Berhampur Co-operative Urban Bank. A copy of the RBI notification in this regard is available with ETV Bharat.

A top official of RBI, who did not wish to be named, said that although from time to time RBI imposes a penalty on erring cooperative banks on grounds of non-compliance with apex bank directions, such an incident is rare when three banks are penalized on the same day. "Again, out of the three banks, two are West Bengal- based. However, this is not a new phenomenon. Of the number of cooperative banks that RBI had penalized during the last few years, the majority were West Bengal- based," he said.

"The inspection of the banks conducted by RBI with reference to their financial position as on March 31, 2018 (The Berhampur Co-operative Urban Bank Ltd.) and March 31, 2019 (The Boral Union Co-operative Bank Ltd. and Khatra People’s Co-operative Bank Ltd.) revealed, inter alia, contravention of/ non-compliance with the directions issued by Reserve Bank of India (RBI) on “Exposure Norms and Statutory/Other Restrictions-UCBs”," the RBI notification has read.

However, RBI did not impose a penalty on these cooperative banks immediately at that point of time. Rather, RBI then issued notices to these banks asking them to show cause as to why penalty should not be imposed for contravention of / non-compliance with the directions.

Subsequently, the banks filed their replies and their representatives appeared for hearing before the apex bank officials. However, their line of arguments could not satisfy the apex bank officials who found that the charges of non-compliance against these three cooperative banks have merit. Soon after that RBI decided to impose a monetary penalty on these cooperative banks and issue a notification in this regard.

When contacted, the state cooperation department minister, Arup Roy refused to make any comment on the matter. "Unless and until I have the details on this matter it would be unfair on my part to comment on it," he said.