The RBI is tough on banks that flout the laws; they might face fines of lakhs and are aware of the effects on clients

 The RBI is tough on banks that flout the laws; they might face fines of lakhs and are aware of the effects on clients

RBI Financial penalty: The Reserve Bank has fined five cooperative banks lakhs of dollars as part of its action against them. Tell us why this is happening.

Cooperative Bank Penalties: The Reserve Bank of India continues to take legal action against cooperative banks that disobey regulations. Five co-operative banks were recently hit with another lakhs penalties by the Central Bank. Manmandir Co-operative Bank, Sanmitra Co-operative Bank of Pune, Lakhwar Nagrik Co-operative Bank of Gujarat Mehsana, Contai Co-operative Bank of West Bengal, and Sarvodaya Co-operative Bank of Mumbai are the names of the banks on which action has been taken.

How many lakhs of rupees were these banks fined?

Manmandir Co Operative Bank has been fined Rs 3 lakh by the Reserve Bank. The bank has been hit with this action because it disregarded the KYC regulations and failed to keep sufficient records regarding the deposit accounts of its clients. All banks are now required by the Reserve Bank of India to upgrade their KYC; failing to do so would result in fines for the noncompliant institutions. Lakhwar Nagrik Sahakari Bank of Mehsana, Gujarat has been fined Rs 2 lakh by RBI for giving false information on loans and advances.

Additionally, Contai Co-operative Bank was fined Rs 1 lakh for disregarding KYC regulations. Sarvodaya Sahakari Bank has been fined Rs 1 lakh for collecting fines from clients arbitrarily for failing to maintain minimum balances and for providing inaccurate information regarding bank deposit accounts. Sanmitra Co-operative Bank in Pune has been fined Rs 1 lakh for concealing information about deposit accounts.

RBI said this about action.

The Reserve Bank of India has said that its goal is not at all to impede the operation of the banks while providing details regarding the actions taken against various institutions. The reason for this action is because the regulations were disregarded. Additionally, the RBI said that all of these banks would go on with business as usual and that consumers won't be impacted.