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The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹50 lakh on NKGSB Co-operative Bank Ltd. for non-compliance with the Reserve Bank of India (Know Your Customer) Directions, 2016. The order, dated January 12, 2024, was issued under the powers vested in the central bank under the Banking Regulation Act, 1949.
The RBI stated that the action is based on deficiencies in regulatory compliance and does not question the validity of any transaction or agreement entered into by the bank with its customers.
The penalty follows RBI’s statutory inspection of the bank, conducted with reference to its financial position as on March 31, 2021. During the examination of inspection findings and related correspondence, the central bank observed that the bank had opened and allowed transactions in current accounts of a company without conducting the required customer due diligence.
A notice was subsequently issued to the bank asking why a penalty should not be imposed for the lapses. After reviewing the bank’s written reply, additional submissions, and oral representations during the personal hearing, RBI concluded that the violation was substantiated and warranted the imposition of the monetary penalty.
[RBI]