the co-operative bank, requesting it to give reasons as to why a penalty should not be imposed for its deficiency in regulatory compliance. Subsequently, last week, the apex bank decided impose a monetary penalty of ₹5 million (US$68,424) in response to the violations.
“After considering the bank’s reply to the notice and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty,” the central bank said in a statement. However, the monetary policy regulator clarified that the actions is based on non-compliance by the Mumbai-based financial service provider and is not an expression regarding the validity of any transactions and agreements formed between the bank and its customers.
The Bombay Mercantile Co-operative Bank was not the only banking organisation to be subjected to a penalty by the RBI last week. The central bank had also decided to impose a penalty of ₹200,000 (US$2,737) on the Akola District Central Co-operative Bank in response to non-compliance in know your customer (KYC) regulations.
“The inspection report of the bank based on its financial position as on March 31, 2019 and the Inspection Report pertaining thereto revealed, inter alia, that the bank had failed to put in place a robust system for throwing alerts as part of effective identification and monitoring of suspicious transactions, resulting in non-compliance with directions issued by RBI,” the central bank noted.
This penalty was imposed following the consideration of the oral submissions that were made by the co-operative bank during a personal hearing held with the RBI.
