RBI penalises two Gujarat-based co-op banks

MUMBAI: The Reserve Bank has imposed penalty of up to Rs 5 lakh on two Gujarat-based co-operative sector lenders -- the Mehsana Urban Co-operative Bank Ltd and the Jamnagar Peoples Co-operative Bank Ltd -- for violation of certain guidelines.

The violations range from conduct of non-banking business to non-reporting of cash transactions, the RBI said.

"The RBI... imposed a monetary penalty of Rs 5 lakh on the Mehsana Urban Co-operative Bank Ltd, Mehsana (Gujarat)," it said in a statement.

The apex bank added that the penalty was imposed for violation of RBI instructions on membership of co-operative societies, conduct of non-banking business and using the word 'Bank' in the name of another institution.

In another case, a penalty of Rs 1 lakh was the Jamnagar Peoples Co-operative Bank Ltd for violation of RBI instructions in respect of reporting cash transactions of above Rs 10 lakh.

In both instances the RBI had issued show cause notices to the bank and the fines were imposed after going through the submissions made by the lenders.

"... the RBI concluded that the violation was substantiated and warranted imposition of penalty," it said.