RBI Slaps Rs5 Lakh Penalty on 2 Cooperative Banks from Gujarat and Chhattisgarh

Moneylife Digital Team 04 July 2025

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs5 lakh on two cooperative banks, one from Gujarat and the other from Chhattisgarh, for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs5 lakh has been imposed on Gujarat-based Shree Chhani Nagrik Sahakari Bank Ltd.

Chhattisgarh-based District Central Cooperative Bank Ltd has been penalised Rs1 lakh.

Shree Chhani Nagrik Sahakari Bank has been penalised for not complying with several RBI directives. These include guidelines on know your customer (KYC) norms, protecting customers by limiting their liability in unauthorised electronic banking transactions and implementing both the basic and comprehensive cybersecurity frameworks for primary urban cooperative banks (UCBs), following a graded approach.

A recent statutory inspection by RBI found that Shree Chhani Nagrik Sahakari Bank failed to conduct periodic reviews of the risk categorisation of certain accounts at least once every six months. The lender also did not provide customers with 24x7 access to report unauthorised electronic banking transactions through multiple channels. Additionally, it failed to implement certain cybersecurity controls mandated by the RBI under its cybersecurity framework.

District Central Cooperative Bank has been fined for failing to comply with certain RBI guidelines related to KYC norms. RBI observed that the lender did not upload the KYC records of some customers to the central KYC records registry (CKYCR) within the prescribed timeline. It also failed to carry out periodic updates of KYC information for certain customers as required.

Additionally, District Central Cooperative Bank allotted multiple customer identification codes to some individuals instead of assigning a single unique customer identification code (UCIC) to each customer, as mandated.

"After considering the reply and oral submissions of both the banks during the personal hearing, RBI concluded that the charges of non-compliance with directions were substantiated and warranted imposition of monetary penalty," RBI says.

In both cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered into with their customer.

Comments

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srinivastang760

5 months ago

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