THIRUVANANTHAPURAM: The RBI has slapped a Rs 48-lakh penalty on the Kerala State Cooperative Bank, the Kerala Bank, for lack of compliance with its guidelines, including the one on gold loans. The Kerala Bank violated RBI directions to cooperative banks on holding shares of other cooperative societies and also on the quantum of gold loans which can be granted under the bullet repayment option.
The violations were flagged in the statutory inspection report by the National Bank for Agriculture and Rural Development on the Kerala Bank’s financial position as on March 31, 2019. The RBI imposed the penalty after hearing the version of the bank. Meanwhile, the Kerala Bank has said the lack of compliance was reported before its formation, in the Kerala State Cooperative Bank. The inspection report was for the financial year ending March 31, 2019.
Bank accepted bullet payments above cap
As per the RBI guideline only up to 2% of a cooperative bank’s own fund, including reserve fund and capital, can be invested as shares in other cooperatives. This was violated in the shareholding in IFFCO and Pariyaram Medical College and Mangalysuthra Cooperative Society.
The guideline on gold loan says that bullet payment of gold loans is limited to loans up to Rs two lakh. But the bank had accepted bullet payment for loans above Rs two lakh. Bullet payment is the option in which capital and interest is paid at one go. The Kerala Bank said the guideline on gold loan was followed after its formation. The bank has also written to the three societies to return the investment.