RBI imposes monetary penalty on Kokan Mercantile Co-operative Bank Limited., Mumbai, Maharashtra

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹1 lakh on Kokan Mercantile Co-operative Bank Limited., Mumbai, Maharashtra, for contravention of RBI directions on Maintenance of Deposit Accounts. RBI said its inspection found that the bank was levying fixed penal charges for shortfall in minimum balance in savings accounts, rather than charges proportionate to the extent of shortfall, and was also not giving the prescribed notice about penal charges becoming applicable if the minimum balance was not restored within a month. After considering the bank’s reply to a show-cause notice, RBI concluded that the non-compliance was substantiated and warranted penalty under the Banking Regulation Act.