Mumbai, December 12, 2022: The Reserve Bank of India (RBI) has taken strict action against Shri Kanyaka Nagari Sahakari Bank Ltd., Chandrapur, Maharashtra, imposing a monetary penalty of ₹4.00 lakh for non-compliance with Know Your Customer (KYC) directives issued to Urban Co-operative Banks. This penalty, announced through an order dated December 05, 2022, falls under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949.
The penalty stems from the bank’s failure to adhere to the regulatory guidelines set by the RBI. While this action is centered on deficiencies in regulatory compliance, it is important to note that it does not cast doubt on the validity of any transactions or agreements entered into by the bank with its customers.
The RBI’s scrutiny of Shri Kanyaka Nagari Sahakari Bank’s financial position as of March 31, 2021, revealed several critical shortcomings in its operations. These included the absence of a system for periodic review of risk categorization of accounts, a lack of procedures for the periodic updating of KYC records for customers, and an absence of robust software to identify and monitor suspicious transactions—all in violation of RBI’s directives.
In response to these serious lapses, the RBI issued a formal Notice to the bank, calling upon them to provide a valid reason why a penalty should not be imposed for non-compliance with regulatory guidelines. The bank, in turn, submitted its responses and participated in oral hearings to present its case.
After careful examination of the bank’s responses and the arguments put forth during the personal hearing, the RBI determined that the charges of non-compliance with its directions were well-founded. As a result, the monetary penalty of ₹4.00 lakh was imposed on Shri Kanyaka Nagari Sahakari Bank Ltd.
This regulatory action underscores the RBI’s unwavering commitment to maintaining the highest standards of compliance within the Indian banking sector. It serves as a stark reminder to all financial institutions of the critical importance of adhering to regulatory directives, particularly those related to KYC procedures and the monitoring of suspicious transactions.
Shri Kanyaka Nagari Sahakari Bank Ltd. is urged to take immediate corrective measures to rectify the identified deficiencies and strengthen its KYC and anti-money laundering processes. Failure to do so may lead to further regulatory actions, potentially impacting the bank’s operations and reputation.
The imposition of this penalty is part of the RBI’s broader mission to ensure the stability and integrity of the Indian banking system, safeguard the interests of depositors, and maintain trust in financial institutions across the country.
