Recorded RBI impact
Fine: Rs 6.00 L
Monetary penalty · Fresh imposition
Published by RBI
3 Jun 2025
Case Brief
By an order dated May 30, 2025, RBI imposed a monetary penalty of Rs 6.00 lakh on The Citizen Co-operative Bank Ltd., Noida. The penalty was imposed after a statutory inspection and a show-cause process found contravention of Section 12B read with Section 56 of the Banking Regulation Act, 1949, along with non-compliance with RBI directions on KYC. RBI said the bank failed to obtain prior permission before a person was issued/allotted shares along with relatives beyond the permissible limit, and failed to put in place robust software to identify suspicious transactions. The penalty was levied under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
Why RBI Acted
RBI found, based on its statutory inspection and supervisory findings, that the bank contravened Section 12B read with Section 56 of the Banking Regulation Act, 1949 and failed to comply with certain RBI directions on Know Your Customer (KYC). Specifically, the bank failed to obtain prior RBI permission before a person issued/allotted shares to him along with relatives beyond the permissible limit, and failed to deploy robust software to flag suspicious transactions. Penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
Operating Impact
The bank must absorb the penalty and address the compliance gaps flagged by RBI, especially around share allotment permissions and suspicious-transaction monitoring. The order does not itself impose an operating restriction, but it leaves the bank exposed to any further action RBI may choose to initiate.
Regulatory Basis
- Section 12B read with Section 56 of the Banking Regulation Act, 1949
- Section 47A(1)(c) read with Sections 46(4)(i) and 56 of BR Act
Action Facts
- Primary Impact
- Fine: Rs 6.00 L
- Order Date
- 30 May 2025
- Effective From
- 30 May 2025
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank