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Kokan Mercantile Co-operative Bank Limited

Co-operative bankMumbai, Maharashtra

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 1.00 L

Monetary penalty · Fresh imposition

S1

Published by RBI

5 Jun 2023

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹1 lakh on Kokan Mercantile Co-operative Bank Limited., Mumbai, Maharashtra, for contravention of RBI directions on Maintenance of Deposit Accounts. RBI said its inspection found that the bank was levying fixed penal charges for shortfall in minimum balance in savings accounts, rather than charges proportionate to the extent of shortfall, and was also not giving the prescribed notice about penal charges becoming applicable if the minimum balance was not restored within a month. After considering the bank’s reply to a show-cause notice, RBI concluded that the non-compliance was substantiated and warranted penalty under the Banking Regulation Act.

Why RBI Acted

Customer protectionFair practicesReporting & disclosure

RBI imposed a monetary penalty after a statutory inspection and review of the bank’s replies found that it had breached directions on Maintenance of Deposit Accounts. The bank was collecting fixed penal charges for shortfall in maintenance of minimum balance in savings accounts instead of charging proportionately to the extent of shortfall, and it did so without giving notice that penal charges would apply if the minimum balance was not restored within a month. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.

Operating Impact

The bank must bear the monetary penalty, but the release does not impose any new operating restriction or licence action. The underlying compliance expectation remains that the bank should charge minimum-balance penalties only in line with RBI directions and provide the required notice to affected depositors.

Regulatory Basis

  • Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949

Action Facts

Primary Impact
Fine: Rs 1.00 L
Order Date
29 May 2023
Effective From
29 May 2023
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank