Recorded RBI impact
Fine: Rs 3.00 L
Monetary penalty · Fresh imposition
Published by RBI
21 Nov 2024
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 3 lakh on The Sundargarh District Central Co-operative Bank Ltd., Odisha. RBI said the action followed a statutory inspection and subsequent show-cause process that found contraventions of sections 20 and 26A read with section 56 of the Banking Regulation Act, 1949, along with non-compliance with RBI directions on KYC norms. The sustained issues included sanctioning loans to directors, not transferring eligible unclaimed amounts to the Depositor Education and Awareness Fund, and failing to follow customer due diligence when opening certain new accounts. RBI clarified that the penalty is based on regulatory compliance deficiencies and does not pronounce on the validity of any transaction, and that it is without prejudice to any other action that may be initiated.
Why RBI Acted
RBI imposed a monetary penalty after supervisory inspection and show-cause proceedings found that the bank had contravened provisions of sections 20 and 26A read with section 56 of the Banking Regulation Act, 1949 and had not complied with certain RBI directions on Know Your Customer norms. The sustained charges included sanctioning loans to its directors, failing to transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund, and failing to follow customer due diligence procedures when opening certain new accounts. The 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 failures identified by RBI, including lending-related restrictions under the BR Act, transfer of unclaimed amounts, and KYC/customer due diligence controls. The action has no direct operational ban, but it signals possible further supervisory action if the deficiencies persist. Customers and depositors are indirectly affected through the bank’s strengthened compliance obligations.
Regulatory Basis
- sections 20 and 26A read with section 56 of the Banking Regulation Act, 1949
- section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 3.00 L
- Order Date
- 13 Nov 2024
- Effective From
- 13 Nov 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank