Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
3 Jul 2015
Case Brief
The Reserve Bank of India imposed a monetary penalty on The Banaskantha Mercantile Co-operative Bank Ltd., Palanpur, Dist. Banaskantha (Gujarat) under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The action followed an inspection related to the bank’s financial position as on March 31, 2014, which found violations of RBI directives/guidelines on Know Your Customer (KYC) and Anti Money Laundering (AML). RBI issued a show-cause notice, considered the bank’s written reply and personal submissions, and then imposed a penalty of ₹5 lakh.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after an inspection found violations of RBI directives/guidelines on KYC and AML. The bank received a show-cause notice, submitted a written reply and personal submissions, but RBI concluded the violations were substantiated and warranted penalty.
Operating Impact
The bank must absorb the financial penalty; the release does not mention any operational restriction or license impact. The action signals supervisory non-compliance on KYC/AML, but there is no stated forward-looking ban or cap affecting depositors or counterparties.
Regulatory Basis
- Section 47A (1)(b) read with Section 46 (4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank