Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
29 Oct 2012
Case Brief
The Reserve Bank of India penalised The Vijay Co-operative Bank Ltd., Ahmedabad 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 violated KYC norms and operational instructions by distributing dividend without obtaining prior approval from the central bank. After considering the bank's reply and personal submission, RBI concluded the contraventions were substantiated and imposed a monetary penalty of Rs 5 lakh.
Why RBI Acted
The Reserve Bank of India 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 Know Your Customer (KYC) norms and operational instructions by distributing dividend without obtaining prior approval from RBI. RBI considered the bank's written reply and personal submission, but concluded that the violations were substantiated and warranted penalty.
Operating Impact
The bank must absorb the penalty and ensure tighter compliance with KYC requirements and RBI approval conditions for dividend distribution. The action does not indicate a restriction on ongoing operations, but it signals supervisory scrutiny and the need for corrective compliance measures.
Regulatory Basis
- Section 47A (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