Three cooperative banks are fined Rs. 4 lakh by the RBI for breaking KYC and prudential standards.

Three cooperative banks have been fined Rs4 lakh by the Reserve Bank of India (RBI) for disobeying the banking regulator's directives. Mumbai District Central Co-operative (DCC) Bank Ltd., located in Maharashtra, has been hit with the highest penalty of Rs2 lakh.

Karaikudi Cooperative Town Bank Ltd. from Tamil Nadu and District Cooperative Central Bank Ltd. from Andhra Pradesh are two more institutions that the RBI has penalized.

Mumbai DCC Bank has been fined for violating Section 20 of the Banking Regulation Act, 1949 (BR Act). Mumbai DCC Bank had approved several director-related loans, according to the RBI's mandatory inspection.

Karaikudi Cooperative Town Bank was fined Rs1.50 lakh for disobeying RBI directives regarding know-your-customer (KYC) rules and prudential standards on capital adequacy for primary urban cooperative banks (UCBs).

The RBI claims that even though Karaikudi Cooperative Town Bank's capital to risk-weighted assets ratio (CRAR) was below the legal minimum, it nevertheless returned share capital to its members. Additionally, despite its insufficient CRAR, it approved loans without adhering to the obligatory share connecting to borrowings requirement. Furthermore, the bank did not upload customer KYC records to the central KYC records registry (CKYCR) before the deadline. The District Cooperative Central Bank in Andhra Pradesh has been penalized for failing to follow certain of the RBI's KYC directives. The lender did not upload the consumers' KYC records to CKYCR within the allotted period.

According to RBI, the penalties in all three cases are based on regulatory compliance flaws and are not meant to be imposed on the legality of any transactions or agreements they made with their customers.