Recorded RBI impact
Fine: Rs 1.10 L
Monetary penalty · Fresh imposition
Published by RBI
30 Oct 2023
Case Brief
By an order dated September 19, 2023, RBI imposed a monetary penalty of ₹1.10 lakh on Birbhum District Central Co-operative Bank Ltd., Birbhum, West Bengal. The penalty followed a NABARD inspection that found lapses in periodic review and application of risk categorisation for accounts, and failure to obtain membership of three of the four Credit Information Companies. RBI said the contraventions were under its KYC Directions, 2016 and CIC membership requirements, and were established after considering the bank’s reply and oral submissions.
Why RBI Acted
RBI imposed a monetary penalty after a NABARD statutory inspection found that the bank failed to carry out periodic review of risk categorisation of accounts, failed to undertake risk categorisation for a number of accounts, and failed to obtain membership of three out of four Credit Information Companies. RBI concluded the non-compliance with its KYC directions and CIC membership requirements was substantiated under the Banking Regulation Act, 1949 and the Credit Information Companies (Regulation) Act, 2005.
Operating Impact
The bank must absorb the penalty and address the compliance gaps identified by RBI/NABARD, particularly around KYC risk categorisation and CIC membership. The order does not invalidate customer transactions, but it signals regulatory non-compliance and may prompt tighter internal controls and remediation.
Regulatory Basis
- Section 47-A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
- Section 25 (1) (iii) read with section 23 (4) of the Credit Information Companies (Regulation) Act, 2005
Action Facts
- Primary Impact
- Fine: Rs 1.10 L
- Order Date
- 19 Sept 2023
- Effective From
- 19 Sept 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank