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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹10 lakh on The Co-operative Bank of Rajkot Ltd., Rajkot (Gujarat) for contravention of regulatory directions issued by RBI. The directions pertained to reporting of unauthorised transactions by customers, proper use of the bank’s registered name, and monitoring and reporting of frauds in Urban Co-operative Banks (UCBs).
The penalty has been imposed under the provisions of Section 47A (1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following non-compliance by the bank with the above directions. RBI clarified that this action is based on regulatory deficiencies and is not intended to question the validity of any transaction or agreement between the bank and its customers.
A statutory inspection conducted by RBI with reference to the bank’s financial position as on March 31, 2022, revealed multiple contraventions:
The bank did not provide a direct link on its website for lodging complaints regarding unauthorised electronic transactions, nor did it offer 24x7 access via multiple channels for reporting such transactions or payment instrument losses. Customers were also unable to instantly respond to SMS and email alerts sent by the bank.
The bank used an abridged form of its name in social media posts, without prominently displaying the full name as per the banking license, and the font size of the full name was smaller than the abbreviated name.
A fraud case was not reported to RBI within the prescribed timeline, violating RBI’s monitoring and reporting directions.
Following a notice and personal hearing, RBI concluded that the charges were substantiated and warranted the imposition of the penalty.
[RBI]