The Reserve Bank of India has imposed a monetary penalty of Rs.1.00 lakh (Rupees one lakh only) on The Karjan Nagarik Sahakari Bank Ltd., Karjan, District Vadodara (Gujarat), in exercise of the powers vested in it under the provisions of Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies), for violation of the Reserve Bank's instructions relating to 'know your customer' (KYC) norms.

The Reserve Bank had issued a show cause notice to the bank based on the findings of inspection for the financial position as on March 31, 2012, in response to which the bank submitted a written reply. After considering the facts of the case and the bank’s reply in the matter, the Reserve Bank came to the conclusion that the violation was substantiated and warranted imposition of the penalty.

Sabeeta Badkar

Assistant Manager

KYC compliance breach leads to monetary penalty under Banking Regulation Act and RBI supervisory powers. Reserve Bank of India imposed a monetary penalty on a co operative bank for violations of its know your customer (KYC) norms, invoking powers under the Banking Regulation Act (as applicable to co operative societies) after an inspection of the bank's financial position, issuance of a show cause notice, and consideration of the bank's written reply.