Banking regulator, Reserve Bank of India has levied penalty on as many as 11 cooperative banks in Gujarat in the last 40 days. It is an indicative that too many cooperative banks are involving themselves in rule violating activities.

In the tenor between January 24 to March 04, 2011, these banks have been fined in the range from Rs 1 lakh to Rs 5 lakhs on charges of non adherence to know your customer (KYC) norms as well as anti money laundering (AML) directives.

The basic rule violating steps taken by these banks include allowing a customer to open multiple bank accounts with the same bank and not monitoring the transactions happening therewith. It was directed by the apex bank in 2002 that all accounts in which transaction more than Rs 10 lakh has occured need to be mentioned to the Financial Intelligene Unit (FIU) of India.

Cooperative banks have however not adhered to this rule.

"The bank officials some times forget to send the details on time and also not many are aware of the AML and KYC norms, and find themselves on the wrong side without any malafide intention," said Jyotindra Mehta, chairman of Gujarat Urban Co-operative Banks Federation (GUCBF).