|
The Reserve Bank of India (RBI), by an order dated September 08, 2025, has imposed a monetary penalty of Rs 3 lakh (Rupees Three Lakh only) on Progressive Mercantile Co-operative Bank Limited, Dist. Ahmedabad, Gujarat, for non-compliance with RBI directions on ‘Inspection & Audit Systems in Primary (Urban) Co-operative Banks’, ‘Know Your Customer’, and ‘Customer Protection – Limiting Liability of Customers of Co-operative Banks in Unauthorized Electronic Banking Transactions’. The penalty has been imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
RBI had conducted a statutory inspection of the bank with reference to its financial position as on March 31, 2024. Based on supervisory findings and subsequent correspondence, a notice was issued to the bank asking it to explain why a penalty should not be imposed for its failure to comply with the said directions. After reviewing the bank’s response, RBI found that the charges were sustained, warranting imposition of the penalty.
Key lapses included conducting concurrent audits quarterly instead of undertaking simultaneous transaction checks with delayed report submissions, failing to carry out periodic reviews of risk categorisation of certain accounts at least once in six months, and not enabling customers to instantly respond via “Reply” to SMS alerts to register objections to unauthorised electronic banking transactions.
RBI clarified that the action is based on deficiencies in regulatory compliance and does not question the validity of any transactions or agreements entered into by the bank with its customers. The penalty is without prejudice to any other action that may be initiated by RBI against the bank.
|