The Reserve Bank of India has imposed a monetary penalty of Rs. 5.00 lakh (Rupees Five lakh only) on the Bijnor Urban Co-operative Bank Ltd., Bijnor, Uttar Pradesh, in exercise of the 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 the following violations:

 i.   Sanctioning Loans and Advances to Directors and their Relatives – Violation of Para 5 of Master Circular UBD.CO.BPD.MC.No.8 /12.05.001/2011-12 dated July 1, 2011.

 ii.   Know Your Customer norms - Violation of RBI Circular UBD.PCB.Cir.No.30 /09.016.00/2004 - 05 dated December 15, 2004.

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

Sucheta Vazkar

Manager

Monetary penalty under Banking Regulation Act for related party lending and KYC non-compliance after regulatory review. Reserve Bank of India imposed a monetary penalty on Bijnor Urban Co-operative Bank Ltd. under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act for sanctioning loans to directors and relatives contrary to the Master Circular and for deficiencies in Know Your Customer compliance contrary to the specified RBI circular; the action followed a show cause notice, the bank's written reply, and the Reserve Bank's conclusion that the violations were substantiated.