RBI Imposes Rs23.23 Lakh Penalty on Karnataka State Co-operative Apex Bank for Non-compliance with KYC Norms

Moneylife Digital Team 18 April 2023

Reserve Bank of India (RBI) has imposed a fine of Rs23.23 lakh on Bengaluru-based Karnataka State Co-operative Apex Bank Ltd for violating specific provisions of know-your-customer (KYC) norms and directions issued on membership of credit information companies (CICs).

Earlier, the National Bank for Agriculture and Rural Development (NABARD) conducted an inspection of the Bengaluru-based Bank. The inspection report revealed that during financial year (FY)19-20, Karnataka State Co-operative Apex Bank did not undertake risk categorisation of customers, put into use any robust software as a part of effective identification and reporting of suspicious transactions and submit data to all the four CICs regularly (at monthly or shorter intervals).

RBI then issued a show-cause notice to the Bank.

After considering the Bank’s reply to the notice and oral submissions made during the personal hearing, RBI says it concluded that the charge of non-compliance with its directions was substantiated and warranted the imposition of a monetary penalty to the extent of non-compliance with the rules.

RBI then imposed a monetary penalty of Rs23.23 lakh on the Bank.

The penalty, according to RBI, is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered by the Bank with its customers.

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