Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
30 Sept 2011
Case Brief
The Reserve Bank of India penalised Alavi Co-operative Bank Ltd., Vadodara, Gujarat, by imposing a monetary penalty of Rs 5.00 lakh under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank had failed to adhere to Know Your Customer (KYC) norms and Anti Money Laundering (AML) guidelines. After considering the bank's written reply to the show-cause notice, RBI concluded that the violation was substantiated and merited the penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after finding that Alavi Co-operative Bank Ltd., Vadodara had not adhered to Know Your Customer (KYC) norms and Anti Money Laundering (AML) guidelines. The bank had replied to a show-cause notice, but RBI concluded the violation was substantiated and warranted penalty.
Operating Impact
The bank must absorb the penalty; the action does not itself impose an operating restriction, but it signals continued regulatory scrutiny for KYC/AML compliance. The consequence is financial and reputational for the bank, with indirect compliance pressure on its customer onboarding and monitoring processes.
Regulatory Basis
- Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank