In a recent development, the Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.00 lakh on Nashik Zilha Sarkari & Parishad Karmachari Sahakari Bank Niyamit, Nashik (Maharashtra). The penalty, issued through an order dated January 18, 2024, is a result of non-compliance with the directives outlined by RBI concerning Know Your Customer (KYC) practices. This penalty is enacted under the authority vested in RBI by the provisions of section 47A (1)(c) read with sections 46 (4)(i) and 56 of the Banking Regulation Act, 1949.
The action taken by RBI is specifically rooted in identified deficiencies in regulatory compliance and should not be construed as a judgment on the validity of any transactions or agreements between the bank and its customers.
Background:
The regulatory scrutiny of the bank, based on a statutory inspection conducted by RBI with reference to its financial position as of March 31, 2022, revealed various issues. Notably, the bank had failed to establish a system for the periodic review of risk categorization of its customers, in violation of the aforementioned directions issued by RBI. Subsequently, a Notice was issued to the bank, prompting it to provide reasons as to why a penalty should not be imposed for the observed failure to comply with the specified directives.
After evaluating the bank’s response to the notice and considering oral submissions made during the personal hearing, RBI concluded that the charge of non-compliance with the issued directions was substantiated. This warranted the imposition of a monetary penalty on the Nashik Zilha Sarkari & Parishad Karmachari Sahakari Bank.
