Reserve Bank of India imposes monetary penalty on Swarna Bharathi Sahakara Bank Niyamitha, Bengaluru

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹10 lakh on Swarna Bharathi Sahakara Bank Niyamitha, Bengaluru, by order dated July 25, 2019. RBI said the bank had not complied with its directions on collection of third party account payee cheques, after scrutiny revealed that it was collecting such cheques drawn in favour of members of credit societies for amounts exceeding ₹50,000. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after considering the bank's reply and oral and additional submissions; RBI stated the action was based on regulatory deficiencies and not intended to pronounce on the validity of customer transactions.