RBI imposes monetary penalty on The Sahayadri Sahakari Bank Limited, Mumbai, Maharashtra

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹6.00 lakh on The Sahayadri Sahakari Bank Limited, Mumbai, by order dated September 15, 2023. The penalty was issued for contravention of Section 26A read with Section 56 of the Banking Regulation Act, 1949, specific directions issued under the Supervisory Action Framework, and RBI directions on Know Your Customer (KYC) and maintenance of deposit accounts for primary (urban) co-operative banks. RBI’s inspection found that the bank had not transferred eligible amounts to the Depositor Education and Awareness Fund, had offered deposit interest rates above those offered by SBI in violation of SAF directions, had not established a system for periodic KYC updation, had not reviewed inoperative/dormant accounts annually, and had not periodically reviewed risk categorisation for high-risk customers. RBI stated that the action was based on regulatory compliance deficiencies and did not pronounce on the validity of customer transactions.