The RBI in action:
The Reserve Bank of India (RBI), by an order dated August 5, 2024, has imposed a monetary penalty of ₹50,000 on Nidhi Co-operative Bank Ltd., Ahmedabad, Gujarat, for failing to comply with RBI’s directions regarding “Loans and Advances to directors, relatives, and firms/concerns in which they are interested.”
RBI conducted a statutory inspection of the bank based on its financial position as of March 31, 2023. Following supervisory findings of non-compliance with the Reserve Bank of India directions, the bank was issued a notice to show cause why a penalty should not be imposed for its failure to comply with the directives. After reviewing the bank’s response to the notice and its oral submissions during a personal hearing, the RBI determined that the bank had sanctioned loans where the relatives of its directors acted as guarantors, thus justifying the imposition of a monetary penalty.
This action is based on regulatory compliance deficiencies and does not affect the validity of any transactions or agreements between the bank and its customers. The imposition of this penalty is without prejudice to any other actions that the Reserve Bank of India may take against the bank.
The Reserve Bank of India (RBI) has, by an order dated August 05, 2024, imposed a monetary penalty of ₹2.00 lakh (Rupees Two lakh only) on Suvarnayug Sahakari Bank Ltd., Pune, for non-compliance with certain directions issued by RBI on ‘Know Your Customer (KYC)’.
The statutory inspection of the bank was conducted by the Reserve Bank of India with reference to its financial position as on March 31, 2023. Based on supervisory findings of non-compliance with the Reserve Bank of India directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank’s reply to the notice and oral submissions made by it during the personal hearing, the Reserve Bank of India found, inter alia, that the charge of failure to update KYC of its customers as per prescribed periodicity was sustained, warranting imposition of monetary penalty.
This action is based on the 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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
