Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
26 Jun 2019
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 2,00,000 on Gomti Nagariya Sahkari Bank Ltd., Jaunpur, Uttar Pradesh, under Section 47A(1)(c) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank violated instructions on Income Recognition, Asset Classification, Provisioning and Other Related Matters for UCBs, exceeded the maximum limit on unsecured advances, and did not comply with KYC/AML guidelines. After issuing a show-cause notice, considering the bank’s written reply and granting personal hearing, RBI concluded that the violations were substantiated and warranted the penalty.
Why RBI Acted
RBI imposed a penalty under Section 47A(1)(c) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after concluding that the bank had violated RBI instructions/guidelines relating to Income Recognition, Asset Classification, Provisioning and Other Related Matters for UCBs, exceeded the maximum limit on unsecured advances, and breached Know Your Customer (KYC) / Anti-Money Laundering (AML) guidelines. The bank had received a show-cause notice, submitted a written reply, and was heard before the violations were found substantiated and penalty imposed.
Operating Impact
The bank must absorb the monetary penalty; the release does not mention any additional operational restriction or remediation deadline. The action is adverse only to the penalised bank and does not directly impose a customer-facing ban, though it reflects regulatory non-compliance across lending and KYC controls.
Regulatory Basis
- Section 47A(1)(c)
- Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank