RBI imposes monetary penalty on The Magadh Central Co-operative Bank Limited, Bihar

Case Brief

RBI imposed a monetary penalty of ₹1.00 lakh on The Magadh Central Co-operative Bank Limited, Bihar by order dated February 27, 2025. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following a statutory inspection by NABARD and subsequent supervisory findings of non-compliance with RBI's KYC directions. RBI found that the bank had failed to put in place a system for periodic review of the risk categorisation of accounts at least once in six months. RBI noted that the penalty is based on regulatory deficiency and does not pronounce on the validity of any transaction or agreement.