Sharad Sahakari Bank in Pune has been fined Rs 6 lakh by the Reserve Bank of India (RBI) for failing to follow instructions about “know your customers” and “interest rate on deposits.”
The central bank stated that this course of action is based on regulatory compliance shortcomings and is not meant to challenge the legality of any agreements or transactions made by the bank with its clients.
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Statutory inspection
RBI said the statutory inspection of the Bank was conducted with reference to its financial position as on March 31, 2021, and an examination of the Risk Assessment Report and all related correspondence pertaining to the same was done.
The inspections revealed that the Bank failed to put in place a system for periodic updation of KYC of accounts and the Bank had not paid applicable interest on balance amounts lying in current accounts of deceased individual depositors or sole proprietorship concerns while making payments to the claimants, the RBI said on Monday in a statement.
Penalty
A notice was issued to the Bank advising it to show cause as to why a penalty should not be imposed for contravention of the RBI directions, as stated therein.
The central bank came to the conclusion that the charge of non-compliance with the aforementioned RBI directions was substantiated and warranted imposition of monetary penalty, to the extent of non-compliance with such directions, after taking into account the bank’s response to the notice and the oral arguments made during the personal hearing.
According to the RBI, this fine was issued in reliance on the authority granted to it under the Banking Regulation Act of 1949.
With inputs from Agencies.
