RBI imposes monetary penalty on The Co-operative Bank, Check Bank Name Here

The Reserve Bank of India (RBI) imposes monetary penalty of Rs. Ten Lakh on Tiruchengode Co-operative Urban Bank Ltd (No. 8994), Tiruchengode, Tamil Nadu (the bank) for failing to follow or violating instructions issued under the “Know Your Customer (KYC) Guidelines – Primary (Urban) Co-operative Banks” and “Exposure Norms and Statutory/Other. This fine has been imposed in retaliation for the bank’s failure to follow the aforementioned instructions given by RBI under Section 47A (1)(c) read in conjunction with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949 (AACS).

This action is based on regulatory compliance issues, and it is not meant to rule on the legality of any agreements or transactions the bank has with its clients.

Background

The inspection report of the bank based on its financial position as on March 31, 2020, revealed inter alia, violation / non-compliance with directions issued on Exposure Norms and Statutory / Other Restrictions – UCBs and Know Your Customer (KYC) Guidelines – Primary (Urban) Co-operative Banks. 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 directions.

After considering the bank’s reply and oral submissions during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted the imposition of monetary penalty.