Recorded RBI impact
Fine: Rs 1.50 L
Monetary penalty · Fresh imposition
Published by RBI
4 Jan 2024
Case Brief
RBI, by order dated December 08, 2023, imposed a monetary penalty of ₹1.50 lakh on The Bhuj Commercial Co-operative Bank Limited, Dist. Kachchh, Gujarat. The bank was penalised for non-compliance with RBI's KYC Direction, 2016 and the RBI directions on interest rate on deposits, after inspection revealed deficiencies including failure to categorise customers by risk and acceptance of interest-free deposit accounts other than current accounts. RBI stated the penalty was based on regulatory compliance deficiencies and not intended to pronounce on the validity of any transaction or agreement with customers.
Why RBI Acted
RBI imposed a monetary penalty after a statutory inspection found that the bank had not categorised its customers as low, medium or high risk and had accepted interest-free deposit accounts other than current account. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, for non-compliance with RBI's 'Know Your Customer (KYC) Direction, 2016' and 'Reserve Bank of India (Co-operative Banks - Interest Rate on Deposits) Directions, 2016'.
Operating Impact
The bank must absorb the monetary penalty and address the compliance gaps identified by RBI, particularly customer risk categorisation under KYC norms and compliance with deposit-interest directions. The action has no stated restriction on operations, but it signals continued supervisory scrutiny and expectations of remedial compliance.
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 1.50 L
- Order Date
- 8 Dec 2023
- Effective From
- 8 Dec 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank