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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹23.23 lakh on The Karnataka State Co-operative Apex Bank Ltd., Bengaluru for non-compliance with RBI (Know Your Customer (KYC)) Directions, 2016 and directions on Membership of Credit Information Companies (CICs). The penalty was imposed under Section 47A (1)(c) read with Sections 46 (4)(i) and 56 of the Banking Regulation Act, 1949, and Section 25(1)(iii) read with Section 23(4) of the Credit Information Companies (Regulation) Act, 2005.
Background:
A statutory inspection of the bank, conducted by NABARD with reference to the financial position as of March 31, 2020, revealed several regulatory deficiencies during FY 2019-20, including:
Failure to undertake risk categorization of customers.
Lack of robust software for effective identification and reporting of suspicious transactions.
Non-submission of customer data to all four Credit Information Companies at regular intervals.
In response, RBI issued a show-cause notice to the bank. After reviewing the bank’s written response, additional submissions, and oral representations during personal hearing, RBI concluded that the charges of non-compliance were substantiated, warranting the imposition of the monetary penalty.
This action underscores RBI’s continued focus on strengthening KYC compliance and credit information reporting among co-operative banks.
[RBI]