RBI imposes monetary penalty on The Vaijapur Merchants Co-operative Bank Limited, Vaijapur, Maharashtra

Case Brief

By an order dated October 21, 2024, RBI imposed a monetary penalty of Rs 7.50 lakh on The Vaijapur Merchants Co-operative Bank Limited, Vaijapur, Maharashtra. The penalty followed a statutory inspection and a show-cause process, after which RBI concluded that the bank had failed to comply with specific directions issued under the Supervisory Action Framework and certain KYC norms. RBI noted, among other things, that the bank made donations to a certain entity, offered higher interest rates on deposits than those offered by State Bank of India in contravention of SAF directions, and did not implement robust software to generate alerts for the effective identification and reporting of suspicious transactions. The penalty was imposed under the Banking Regulation Act, 1949.