RBI imposes monetary penalty on The Delhi State Cooperative Bank Ltd., New Delhi
The Reserve Bank of India (RBI) has, by an order dated December 14, 2022, imposed a monetary penalty of ₹30.85 lakh (Rupees Thirty lakh and Eighty-five Thousand only) on The Delhi State Cooperative Bank Ltd., New Delhi (the bank) for non-compliance with the Reserve Bank of India (Know Your Customer (KYC)) Directions, 2016 as well as directions issued by RBI on ‘Housing Finance’ and for non-compliance with directions issued by National Bank for Agriculture and Rural Development (NABARD) on ‘Frauds - Guidelines for Classification, Reporting and Monitoring’. This penalty has been imposed in exercise of powers conferred on RBI under section 47A (1) (c) read with sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949.
This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
The statutory inspection of the bank conducted by the NABARD with reference to the bank’s financial position as on March 31, 2020, and an examination of the Inspection Report and correspondence pertaining thereto revealed, inter alia, that the bank did not (i) put into use any robust software as a part of effective identification and reporting of suspicious transactions, (ii) abide by the limit on exposure to housing finance and (iii) report cases of fraud to NABARD within the stipulated timeline. In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the statutory directions, as stated therein.
After considering the bank’s reply to the notice, RBI came to the conclusion that the charge of non-compliance with the directions issued by RBI and NABARD were substantiated and warranted imposition of monetary penalty.