Recorded RBI impact
Fine: Rs 7.00 L
Monetary penalty · Fresh imposition
Published by RBI
4 Aug 2021
Case Brief
RBI, by order dated August 04, 2021, imposed a monetary penalty of Rs 7 lakh on Nagarik Sahakari Bank Limited, Bhiwandi, Thane, Maharashtra. The bank was found to have violated RBI directions on Exposure Norms and Statutory/Other Restrictions for UCBs and KYC Directions, including breaches of prudential inter-bank gross exposure and single counterparty exposure limits, failure to allot UCICs to all customers, absence of periodic risk categorization review, and lack of a system to track KYC-updation due accounts. RBI stated the action was taken under the Banking Regulation Act, 1949, and that it was based on deficiencies in regulatory compliance.
Why RBI Acted
RBI found that the bank had not adhered to prudential inter-bank gross exposure limits and prudential inter-bank single counterparty exposure limits, had not allotted UCICs to all new and existing customers, had no system for periodic review of risk categorization of accounts, and had no system to track accounts whose KYC documents were due for updation. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after RBI concluded the violations were substantiated.
Operating Impact
The bank must absorb the financial penalty and ensure its internal controls, exposure monitoring, UCIC allocation, customer risk review, and KYC-updation tracking processes comply with RBI directions. The order does not invalidate customer transactions, but it signals enhanced compliance expectations going forward.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 7.00 L
- Order Date
- 4 Aug 2021
- Effective From
- 4 Aug 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank