Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
24 Jun 2024
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 2,00,000 on National Insurance Employees’ Co-operative Credit & Banking Society Limited, Kolkata, following a statutory inspection with reference to its financial position as on March 31, 2023. RBI found sustained charges that the bank had not maintained the prescribed inter-bank counterparty exposure limit and had failed to implement periodic review of risk categorization of accounts, amounting to non-compliance with RBI directions on investments by Primary (Urban) Co-operative Banks and KYC directions.
Why RBI Acted
RBI imposed a monetary penalty under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after a statutory inspection and show-cause process. The bank was found to have violated RBI directions on 'Investments by Primary (Urban) Co-operative Banks' and 'Know your Customer (KYC) Direction, 2016' by failing to maintain the prescribed inter-bank counterparty exposure limit and failing to implement a system for periodic review of risk categorization of accounts.
Operating Impact
The bank must absorb the monetary penalty and address the compliance gaps identified by RBI. The forward-looking impact is regulatory and reputational: the institution is expected to strengthen investment exposure controls and KYC risk review processes, and RBI may initiate further action if warranted.
Regulatory Basis
- section 47A(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
- 20 Jun 2024
- Effective From
- 20 Jun 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank