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The Jamnagar District Co-operative Bank Limited (Gujarat)

Co-operative bankJamnagar, Gujarat

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 4.10 L

Monetary penalty · Fresh imposition

S2

Published by RBI

2 May 2023

Case Brief

By an order dated April 27, 2023, RBI imposed a monetary penalty of ₹4.10 lakh on The Jamnagar District Co-operative Bank Limited (Gujarat). The penalty was issued for contravention and non-compliance with Section 26A(2) of the Banking Regulation Act, 1949, the Depositor Education and Awareness Fund Scheme, 2014, the RBI KYC Directions, 2016, and provisions of the Credit Information Companies (Regulation) Act, 2005, as well as RBI directions on membership of CICs by co-operative banks. NABARD’s statutory inspection found failures in transferring eligible amounts to the DEA Fund, in having systems for customer risk categorisation review and periodic KYC updation, in maintaining a system/software to identify suspicious transactions, and in reporting data to three CICs.

Why RBI Acted

KYC / AMLReporting & disclosure

RBI imposed a monetary penalty under Section 47A(1)(c) of the Banking Regulation Act, 1949 read with Sections 46(4)(i) and 56 of the Act, and Section 25(1)(iii) read with Section 23(4) of the CIC Act. The statutory inspection by NABARD found that the bank had not transferred eligible amounts to the DEA Fund, did not have systems to review customer risk categorisation or periodically update KYC documents of existing customers, lacked a system/software to identify suspicious transactions, and did not report data (including historic data) to three Credit Information Companies of which it was a member, amounting to non-compliance with the Banking Regulation Act, RBI KYC Directions, and CIC membership directions for co-operative banks.

Operating Impact

The bank must absorb the financial penalty and address the compliance gaps identified by RBI/NABARD. Going forward, it needs to strengthen DEA Fund transfers, KYC review and updation controls, suspicious transaction monitoring, and reporting to Credit Information Companies; the action does not itself impose an operational restriction on customers or counterparties.

Regulatory Basis

  • section 26 A (2) of the Banking Regulation Act, 1949
  • The Depositor Education and Awareness Fund Scheme, 2014
  • the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016
  • the Credit Information Companies (Regulation) Act, 2005
  • RBI directions on ‘Membership of Credit Information Companies by Co-operative Banks’
  • Section 47 A (1) (c) read with Sections 46 (4) (i) and 56 of the Act
  • section 25 (1) (iii) read with section 23 (4) of the CIC Act

Action Facts

Primary Impact
Fine: Rs 4.10 L
Order Date
27 Apr 2023
Effective From
27 Apr 2023
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank