market update

₹1.25 Lakh Penalty Imposed on Nawadah Central Cooperative Bank by RBI for Non-Compliance

November 18, 2024
M Vishnu
Seal of the Reserve Bank of India.png from Wikimedia Commons by Eatcha, CC-BY 4.0“

The Reserve Bank of India (RBI) has slapped a monetary penalty of ₹1.25 lakh on Nawadah Central Cooperative Bank Limited, Bihar. The bank had been penalized due to lapses in its compliance with a few key guidelines on Membership of Credit Information Companies (CICs) and Know Your Customer (KYC) norms.

The result was imposed after the inspection of National Bank for Agriculture and Rural development (NABARD).During the exercise, the RBI observed two serious contraventions: the bank had not provided any borrower credit information to the Credit Information Companies (CICs) and had not established any system to carry out periodical reviews of risk categorization of accounts.

After the notice was sent to the bank, RBI scrutinized the submissions made and found them unsatisfactory. It imposed the penalty on the bank considering the lapses it made in its compliance. However, RBI clarified that the regulatory penalty does not affect the validity of the transactions or agreements entered into by the bank and its customers.