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RBI penalises Bihar-based co-op bank for KYC violation during exchange of demonetised notes


A Bihar-based co-operative bank has been penalised for violation of directions on KYC and guidelines related to exchange of demonetised notes, the Reserve Bank said on Monday. In November 2016, the government had demonetised the then prevailing Rs 500 and Rs 1,000 notes, and the RBI had issued guidelines along with a timeframe for exchange of such currency notes.

In a release, the RBI said it has imposed a penalty of Rs 5 lakh on The Bihar Awami Co-operative Bank Ltd “for violation of the extant directions on Know Your Customer and guidelines in the matter of exchange of Specified Bank Notes, issued by the Reserve Bank of India.”

While more details were not provided, the RBI said the penalty 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 central bank had issued a show cause notice and also provided an opportunity of personal hearing to The Bihar Awami Co-operative Bank, in response to which the lender submitted a written reply.

After considering the facts of the case and the bank’s reply, the Reserve Bank came to the conclusion that the violations were substantiated and warranted imposition of penalty, it said.



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