The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1 lakh on Shri Ganesh Sahakari Bank Limited, located in Nashik, Maharashtra, for contravening the provisions of the Banking Regulation Act, 1949. The penalty, issued by an order dated April 3, 2025, stems from the bank’s failure to comply with certain regulatory directives, particularly those concerning ‘Know Your Customer’ (KYC) norms.
The penalty was imposed following an inspection of the bank’s financial position as of March 31, 2024, conducted by the RBI. The examination revealed that the bank had violated the provisions of Section 26A read with Section 56 of the Banking Regulation Act and had not adhered to specific RBI directions regarding KYC procedures.
The violations identified included the bank’s failure to transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund within the prescribed time frame, as well as its failure to update the KYC details of its customers periodically, as required under the RBI’s guidelines. Additionally, the bank did not carry out the mandated review of risk categorization for all accounts at least once every six months.
The RBI issued a show-cause notice to the bank, asking why a penalty should not be imposed for the identified contraventions. After reviewing the bank’s response and considering oral submissions made during a personal hearing, the RBI concluded that the charges were substantiated, thereby warranting the imposition of the ₹1 lakh monetary penalty.
It is important to note that this action by the RBI is focused on regulatory non-compliance and does not question the validity of any transactions or agreements made by the bank with its customers. The RBI clarified that the imposition of the penalty is not intended to interfere with the bank’s operations but is aimed at ensuring that the bank adheres to the required regulatory framework.
This penalty serves as a reminder of the importance of maintaining strict compliance with the RBI’s regulatory requirements, especially regarding customer due diligence and the timely transfer of unclaimed amounts, ensuring the integrity of the banking system.
The RBI has also indicated that this monetary penalty does not preclude the possibility of further action being taken against the bank, should further deficiencies be found.