The Reserve Bank of India has imposed a monetary penalty of Rs. 5.00 lakh (Rupees five lakh only) on Sher Nagrik Sahakari Bank Ltd., Jabalpur (Madhya Pradesh), in exercise of powers vested in it under the provisions of Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies), for violation of RBI directive/instructions/ guidelines relating to Know Your Customers (KYC)/ Anti Money Laundering (AML) norms, charging of interest on loans and advances and operational instructions issued to the bank by RBI under section 36(1) of the Banking Regulation Act, 1949 (AACS).

The Reserve Bank of India had issued a show cause notice to the bank in response to which the bank submitted a written reply. After considering the facts of the case, the bank's reply and personal submissions in the matter, the Reserve Bank of India came to the conclusion that the violation was substantiated and warranted imposition of the penalty.

Ajit Prasad

Assistant General Manager

KYC/AML compliance breaches result in regulatory monetary sanction under the Banking Regulation Act after show cause proceedings. The Reserve Bank of India determined that Sher Nagrik Sahakari Bank Ltd. breached KYC/AML norms, charged interest contrary to directions, and failed to follow operational instructions under the Banking Regulation Act as applicable to cooperative societies. After issuing a show cause notice and considering the bank's written and personal submissions, the RBI concluded the violations were substantiated under Section 47(A)(1)(b) read with Section 46(4) and Section 36(1), and proceeded to apply its statutory disciplinary powers.