The Bank had outsourced its core management function of internal audit and failed to carry out periodic reviews of risk categorisation of certain accounts, which is required at least once in six months.
MUMBAI (India CSR): The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs. 2 lakh on The Anand Mercantile Co-operative Bank Ltd., Anand, Gujarat, for non-compliance with regulatory directions.
The penalty, imposed by an order dated August 21, 2025, relates to violations of RBI’s guidelines on Managing Risk in Outsourcing of Financial Services by Co-operative Banks and Know Your Customer (KYC) norms, the central bank said in a statement.
The action was initiated following a statutory inspection of the bank based on its financial position as of March 31, 2024. The inspection and subsequent supervisory review revealed that the bank had outsourced its core management function of internal audit and failed to carry out periodic reviews of risk categorisation of certain accounts, which is required at least once in six months.
A notice was issued to the bank to show cause as to why penalty should not be imposed for these lapses. After considering the bank’s reply, additional submissions and personal hearing, RBI concluded that the charges were sustained and warranted the imposition of a monetary penalty.
RBI clarified that the action was based on deficiencies in regulatory compliance and does not pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. The imposition of the penalty is also without prejudice to any other regulatory or supervisory action that the central bank may take.
(India CSR)
