The Reserve Bank of India (RBI) on Monday has imposed a monetary penalty of Rs two lakh on Sarvodaya Co-operative Bank Ltd for contravention directions issued by the central bank on Know Your Customer (KYC).

The bank said, the 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.

 Accordingly, the RBI had issued a notice to the bank asking it to show cause as to why penalty should not be imposed on it for noncompliance with the directions.
 
“After considering the bank’ reply to the ntice, RBI came to the conclusion that he aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty,” the central bank said in a release.
 
The RBI said it has imposed the penalty in exercise of powers vested in it under the Banking Regulation Act, 1949.  
 
It also clarified the action is based on the 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.