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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹4.00 lakh on Smriti Nagrik Sahakari Bank Maryadit, Mandsaur, for non-compliance with RBI directions on Exposure Norms, Statutory/Other Restrictions on Urban Cooperative Banks (UCBs), and Know Your Customer (KYC) requirements.
The penalty has been imposed under the provisions of Section 47 A (1)(c) read with Section 46 (4)(i) and Section 56 of the Banking Regulation Act, 1949, taking into account the bank’s failure to adhere to the specified directions. The action is based on deficiencies in regulatory compliance and does not affect the validity of any transaction or agreement entered into by the bank with its customers.
Inspections of the bank, based on its financial position as of March 31, 2020, and March 31, 2021, revealed several deficiencies, including:
Sanctioning loans beyond the prescribed ceiling to nominal members.
Lack of a system for periodic review of customer risk categorization.
Failure to periodically update KYC information according to risk categorization.
Absence of a mechanism to generate alerts for monitoring and reporting suspicious transactions.
Following these findings, RBI issued a show-cause notice to the bank. After considering the bank’s replies, additional submissions, and oral arguments during a personal hearing, RBI concluded that the non-compliance with the directions was substantiated, warranting the imposition of the monetary penalty.
[RBI]