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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2.50 lakh on The Vaidyanath Urban Co-operative Bank Ltd., Beed, Maharashtra, for non-compliance with directions issued by RBI to Urban Co-operative Banks regarding Know Your Customer (KYC) norms. The penalty was levied under the powers granted to RBI under the Banking Regulation Act, 1949, in view of the bank’s failure to adhere to the prescribed regulatory requirements.
An inspection of the bank’s financial position as of March 31, 2020, revealed that the bank had not conducted periodic updation of KYC of its customers and had not carried out periodic review of risk categorization of accounts, in contravention of RBI directions. A show-cause notice was issued to the bank, requiring it to explain why a penalty should not be imposed.
After evaluating the bank’s responses and oral submissions during the personal hearing, RBI concluded that the non-compliance charges were substantiated and warranted the imposition of the monetary penalty. This action addresses regulatory deficiencies and does not comment on the validity of any transactions or agreements entered into by the bank with its customers.
[RBI]