The Reserve Bank of India (RBI) has imposed, by an order dated September 06, 2021, a monetary penalty of ₹2.00 lakh (Rupees two lakh only) on Sarvodaya Co-operative Bank Ltd., Bhandup (W), Mumbai (the bank) for contravention of/non-compliance with directions issued by RBI on Know Your Customers (KYC). This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI.
The action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
The inspection report of the bank based on its financial position as on March 31, 2019, revealed, inter alia, that the bank had not put in place the system of periodic review of risk categorization of accounts. Based on the same, a Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the aforesaid directions.
After considering the bank’s reply to the Notice, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty.