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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹6 lakh on Sharad Sahakari Bank Ltd., Pune, through an order dated December 28, 2022. The penalty was issued for non-compliance with RBI’s directions on Know Your Customer (KYC) norms and Interest Rate on Deposits. The action was taken under the powers granted to RBI under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
RBI clarified that the penalty is based on shortcomings in regulatory compliance and does not question the validity of any transactions or agreements between the bank and its customers.
The inspection conducted by RBI, based on the bank’s financial position as on March 31, 2021, revealed that the bank had not established a system for periodic KYC updates for customer accounts. It was also found that the bank failed to pay applicable interest on balances in the current accounts of deceased individuals or sole proprietorship firms while settling claims. A notice was issued to the bank asking for an explanation regarding these violations.
After reviewing the bank’s response and considering the oral submissions during the personal hearing, RBI concluded that the violations were substantiated and warranted the imposition of the monetary penalty.
[RBI]