Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
19 Oct 2023
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹2.00 lakh on Mahila Co-operative Nagrik Bank Ltd., Bharuch, Gujarat, by order dated September 18, 2023. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after a statutory inspection and review of related reports and correspondence. RBI said the bank had not complied with directions on 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)' and 'Know Your Customer (KYC)'. The inspection found breaches of inter-bank gross and counterparty exposure limits and a failure to review the risk categorization of accounts at the prescribed periodicity. RBI concluded that the charges of non-compliance were substantiated and that a monetary penalty was warranted. The release notes that the action is based on regulatory deficiencies and is not intended to pronounce upon the validity of any transaction or agreement with customers.
Why RBI Acted
RBI imposed a monetary penalty on Mahila Co-operative Nagrik Bank Ltd., Bharuch, Gujarat under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The penalty followed a statutory inspection with reference to the bank's financial position as on March 31, 2022, which revealed non-compliance with RBI's directions on 'Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)' and 'Know Your Customer (KYC)'. RBI found, inter alia, that the bank breached inter-bank gross and counterparty exposure limits and did not carry out review of risk categorization of accounts at the prescribed periodicity. After considering the bank's reply and oral submissions, RBI concluded the contraventions were substantiated and warranted penalty.
Operating Impact
The bank must absorb the monetary penalty and ensure future compliance with RBI’s KYC and inter-bank exposure norms. The release does not indicate any operational restriction on deposits, lending, or withdrawals, but it signals heightened regulatory scrutiny and the need to strengthen compliance controls.
Regulatory Basis
- Section 47 A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Order Date
- 18 Sept 2023
- Effective From
- 18 Sept 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank