Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
18 Sept 2015
Case Brief
The Reserve Bank of India has imposed a monetary penalty of ₹5.00 lakh on The Kurmanchal Nagar Sahkari Bank Ltd., Nainital, Uttarakhand. The action was taken under Section 47-A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies), after RBI found violations of its directives/guidelines on loans and advances to directors, their relatives, and related concerns, as well as breaches of KYC/AML requirements. RBI had issued a show-cause notice, considered the bank’s written reply, and concluded that the violations were substantiated.
Why RBI Acted
RBI imposed a penalty under Section 47-A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after concluding that the bank violated RBI’s directive/guideline on loans and advances to directors/their relatives/concerns in which they are interested, and also violated Know Your Customer (KYC) and Anti Money Laundering (AML) requirements. The bank had submitted a written reply to the Show Cause Notice, but RBI found the violations substantiated and warranting penalty.
Operating Impact
The bank must absorb the financial penalty and address the compliance weaknesses identified by RBI, particularly around related-party lending controls and KYC/AML processes. The release does not impose a business restriction, but it signals supervisory concern over governance and customer due diligence practices.
Regulatory Basis
- Section 47-A (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