Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
14 Oct 2021
Case Brief
RBI imposed a monetary penalty of ₹1 lakh on KNS Bank, The Kurla Nagarik Sahakari Bank Ltd., Mumbai by order dated October 14, 2021. The penalty was for contravention of Section 26-A read with Section 56 of the Banking Regulation Act, 1949 and the Depositor Education and Awareness Fund Scheme, 2014. RBI said the bank had not transferred balances in certain accounts unclaimed for more than ten years to the Depositor Education and Awareness Fund. After a show-cause process and consideration of the bank's submissions, RBI held that the non-compliance with its directions was substantiated.
Why RBI Acted
Based on an inspection as of March 31, 2020, RBI found that the bank had not transferred balances in certain accounts, unclaimed for more than ten years, to the Depositor Education and Awareness Fund. RBI issued a show-cause notice and, after considering the bank's reply, oral submissions, and additional submissions, concluded that the non-compliance with RBI directions under Section 26-A read with Section 56 of the Banking Regulation Act, 1949 and the Depositor Education and Awareness Fund Scheme, 2014 was substantiated, warranting a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Act.
Operating Impact
The bank must absorb the penalty and remain compliant with depositor-fund transfer requirements and related RBI directions. The action does not invalidate customer transactions, but it underscores ongoing compliance obligations regarding long-unclaimed balances and depositor protection.
Regulatory Basis
- Section 26-A read with section 56 of the Banking Regulation Act, 1949
- Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949
- the Depositor Education and Awareness Fund Scheme, 2014
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 14 Oct 2021
- Effective From
- 14 Oct 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank