Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
6 Sept 2021
Case Brief
RBI, by order dated September 06, 2021, imposed a monetary penalty of ₹2.00 lakh on Sarvodaya Co-operative Bank Ltd., Bhandup (W), Mumbai. The penalty was for contravention of RBI’s Know Your Customer (KYC) directions, specifically the bank’s failure to put in place a system for periodic review of risk categorization of accounts. RBI said the action was taken under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after considering the bank’s reply to the show-cause notice and finding the non-compliance substantiated.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after finding that Sarvodaya Co-operative Bank Ltd. had failed to comply with RBI directions on Know Your Customer (KYC). The inspection report for the bank’s financial position as on March 31, 2019 found that the bank had not put in place a system for periodic review of risk categorization of accounts. After considering the bank’s reply to the show-cause notice, RBI concluded that the non-compliance was substantiated and warranted penalty.
Operating Impact
The bank must absorb the monetary penalty and address the compliance gap identified by RBI, especially the periodic review of customer risk categorization under KYC controls. The order does not describe a ban or restriction on operations, but it signals heightened regulatory scrutiny over the bank’s AML/KYC compliance framework.
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 2.00 L
- Order Date
- 6 Sept 2021
- Effective From
- 6 Sept 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank