Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
12 Feb 2016
Case Brief
The Reserve Bank of India imposed a monetary penalty on The Kutch Mercantile Co-operative Bank Ltd., Rapar, Dist. Kutch (Gujarat), under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank had violated operational instructions issued under Section 36(1), with high non-compliance with KYC norms and no system in place to detect suspicious transactions. After issuing a show-cause notice and considering the bank's written reply, RBI concluded that the violations were substantiated and that the penalty was warranted.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The bank was found to have violated RBI operational instructions issued under Section 36(1), with high non-compliance with KYC norms and no system in place to detect suspicious transactions. RBI considered the bank's written reply to the show-cause notice but concluded that the violations were substantiated and warranted penalty.
Operating Impact
The bank must absorb the financial penalty and address the compliance deficiencies identified by RBI, especially around KYC controls and suspicious transaction monitoring. The action does not itself impose an operating restriction, but it signals supervisory concern and may lead to tighter compliance expectations going forward.
Regulatory Basis
- Section 47A (1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
- Section 36(1) 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