Recorded RBI impact
Fine: Rs 8.00 L
Monetary penalty · Fresh imposition
Published by RBI
22 Aug 2024
Case Brief
By an order dated August 09, 2024, RBI imposed a monetary penalty of ₹8.00 lakh on The Co-operative Bank of Rajkot Ltd., Rajkot, Gujarat. The penalty followed a statutory inspection and a show-cause process, and was based on findings that the bank maintained savings accounts of 37 institutions whose income was not exempt from income tax and failed to carry out risk-based periodic updation of KYC as prescribed. RBI stated that the action was for regulatory compliance deficiencies and without prejudice to any other action it may initiate.
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 a statutory inspection as of March 31, 2023 found supervisory non-compliance. The sustained charges were that the bank maintained savings bank accounts of 37 institutions whose entire income was not exempt from income tax, and it did not carry out risk-based periodic updation of KYC as required by RBI's directions on 'Interest Rate on Deposits' and the Master Direction on KYC.
Operating Impact
The bank must absorb the penalty and remain subject to RBI supervisory scrutiny. The order does not itself bar operations, but it signals compliance lapses in deposit-account handling and KYC monitoring that could lead to further regulatory action if not corrected.
Regulatory Basis
- section 47A(1)(c)
- sections 46(4)(i)
- section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 8.00 L
- Order Date
- 9 Aug 2024
- Effective From
- 9 Aug 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank