BS Reporter / Mumbai/ Ahmedabad April 09, 2011, 0:03 IST

http://www.business-standard.com/india/news/rbi-slams-guj-coop-banks-for-not-adhering-to-anti-money-laundering-act/431543/

Reserve Bank of India has slammed penalty to four cooperative banks in Gujarat for violation of statutory guidelines by not adhering to Anti-Money Laundering (AML) guidelines.

The apex regulator had recently panlised two other state cooperative banks with upto Rs 5 lakh of penalty for not following the statutory guidelines.

The four banks that were penalised included Shree Savli Nagrik Sahakari Bank Ltd, Shree Bharat Co-operative Bank Ltd, Waghodia Urban Co-operative Bank Limited each located in Vadodara district and Navsarjan Industrial Co-operative Bank Ltd in Ankleshwar. Each of the banks have been slammed a penalty of Rs 1 lakh each.

The penalty was imposed for violation of RBI directives/guidelines by not adhering to anti-money laundering guidelines, regarding submission of reports for cash transactions above Rs 10.00 lakh, RBI said in an official statement.

"The apex bank had issued a show cause notice to the banks, in response to which the banks submitted a written reply. After considering the facts of the case, the bank's reply and also personal submissions in the matter, the Reserve Bank came to the conclusion that the violations were substantiated and warranted imposition of penalty," it said.

However, experts from the cooperative banking sector informed that it was a regular inspection by the apex bank and nothing dubious happening with the cooperative banks in the state.

"There is nothing wrong with the cooperative banks in state. However, some of the banks seems to have failed to follow the regular practice of submitting the details of transactions of Rs 10 lakh or more at the banks. The AML act requires the submission of transaction details even if there are 'nil' transactions. But some of the Unit Banks were not educated on this and the penalty was slammed on them. So far there was no enforcement of this act by the RBI itself," said Jyotindra Mehta, president, Gujarat Urban Cooperative Banks Federation.

There are 280 cooperative banks in Gujarat, of which nearly 50 per cent are Unit Banks having deposits in the range of Rs 2.5-3 crore.