Recorded RBI impact
Fine: Rs 4.50 L
Monetary penalty · Fresh imposition
Published by RBI
26 Jun 2023
Case Brief
RBI imposed a monetary penalty of ₹4.50 lakh on Textile Traders Co-operative Bank Ltd., Ahmedabad (Gujarat) by order dated June 19, 2023. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 for contravention of RBI directions on co-operative banks' interest rate on deposits, customer protection for unauthorized electronic banking transactions, and KYC. The inspection found failures in paying interest in specified cases, providing reporting links and reply facilities for unauthorized transaction alerts, and maintaining a system for periodic review of risk categorization of accounts.
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 inspection found the bank had not paid interest in certain permitted cases, did not provide a direct link on its homepage for reporting unauthorized electronic transactions, did not enable customers to reply to SMS/email alerts for instant reporting, and lacked a system for periodic review of risk categorization of accounts under KYC norms.
Operating Impact
The bank must absorb the monetary penalty and address the compliance gaps identified by RBI. The order does not invalidate customer transactions, but it signals regulatory non-compliance and may require the bank to strengthen deposit interest practices, electronic transaction reporting mechanisms, and KYC risk review controls going forward.
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 4.50 L
- Order Date
- 19 Jun 2023
- Effective From
- 19 Jun 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank