Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
5 Jun 2023
Case Brief
By an order dated May 29, 2023, RBI imposed a monetary penalty of ₹2 lakh on Bajirao Appa Sahakari Bank Ltd., Ankalkhop. The penalty was for non-compliance with RBI directions on ‘Investments by Primary (Urban) Co-operative Banks’ and ‘Know Your Customers’ (KYC), based on inspection findings that the bank had breached prudential inter-bank gross and single counterparty exposure limits and had not put in place systems for periodic KYC updation or periodic review of risk categorisation of accounts. RBI stated that the action was based on regulatory deficiencies and did not pronounce on the validity of any transaction or agreement entered into by the bank.
Why RBI Acted
RBI imposed a monetary penalty after a statutory inspection found that the bank had not complied with RBI directions relating to investments by Primary (Urban) Co-operative Banks and Know Your Customer (KYC). The inspection revealed failures to adhere to prudential inter-bank gross and single counterparty exposure limits, and failures to establish systems for periodic updation of KYC and periodic review of risk categorisation of accounts. The penalty was imposed under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the monetary penalty and address the compliance deficiencies identified by RBI, including exposure-limit controls, periodic KYC updates, and risk-categorisation reviews. No direct operational restriction is imposed by this release, but the findings signal supervisory concerns for the bank’s compliance framework.
Regulatory Basis
- section 47A(1)(c) read with sections 46(4)(i) and Section 56 of Banking Regulation Act, 1949 (BR Act)
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Order Date
- 29 May 2023
- Effective From
- 29 May 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank