**Summary:**
On August 21, 2025, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹2 lakh on The Anand Mercantile Co-operative Bank Ltd., Anand, Gujarat, for non-compliance with RBI's directions concerning (i) Guidelines for Managing Risk in Outsourcing of Financial Services by Cooperative Banks and (ii) Know Your Customer (KYC) norms. The penalty was levied under the powers vested in RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following a statutory inspection conducted with reference to the bank's financial position as of March 31, 2024. The RBI found that the bank (i) outsourced its core management function of internal audit and (ii) failed to conduct periodic reviews of risk categorization of certain accounts at least once every six months. The action is based on regulatory compliance deficiencies and does not assess the validity of transactions between the bank and its customers. This penalty is without prejudice to any other actions that RBI may initiate against the bank. For further information, contact Puneet Pancholy, Chief General Manager, Reserve Bank of India. Contact via email at helpdocrbi.org.in or phone at 022 2266 0502.
Key Entities Referenced
Section 47A1c read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949: The specific section of the Banking Regulation Act under which the penalty was imposed.
Puneet Pancholy: Chief General Manager who released the press release.
Reserve Bank of India: The central bank of India, also referred to as RBI.
The Anand Mercantile Cooperative Bank Ltd., Anand, Gujarat: A cooperative bank in Anand, Gujarat, which was penalized by the RBI.
Anand, Gujarat: The city and state where The Anand Mercantile Cooperative Bank Ltd. is located.
Banking Regulation Act, 1949: An act of the Indian Parliament that regulates the banking sector in India.
Guidelines for Managing Risk in Outsourcing of Financial Services by Cooperative Banks: Directions issued by RBI regarding managing risk in outsourcing of financial services.
Know Your Customer (KYC): RBI directions on Know Your Customer guidelines.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
August 25, 2025
RBI imposes monetary penalty on The Anand Mercantile
Co-operative Bank Ltd., Anand, Gujarat
The Reserve Bank of India (RBl) has, by an order dated August 21, 2025, imposed
a monetary penalty of ₹2 lakh (Rupees Two Lakh only) on The Anand Mercantile Co-
operative Bank Ltd., Anand, Gujarat (the bank) for non-compliance with certain
directions issued by RBI on ‘Guidelines for Managing Risk in Outsourcing of Financial
Services by Co-operative Banks’ and ‘Know Your Customer (KYC)’. This penalty has
been imposed in exercise of powers conferred on RBI under the provisions of Section
47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by the RBI with reference to its
financial position as on March 31, 2024. Based on supervisory findings of non-
compliance with RBI directions and related correspondence in that regard, a notice
was issued to the bank advising it to show cause as to why penalty should not be
imposed on it for its failure to comply with the said directions. After considering the
bank's reply to the notice, additional submissions made by it and oral submissions
made during the personal hearing, RBI found, inter alia, that the following charges
against the bank were sustained, warranting imposition of monetary penalty:
The bank had:
i) outsourced its core management function of internal audit and
ii) failed to carry out periodic review of risk categorisation of certain accounts, with
such periodicity being at least once in six months.
This 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. Further, imposition of this monetary penalty is without prejudice to
any other action that may be initiated by RBI against the bank.
(Puneet Pancholy)
Press Release: 2025-2026/974 Chief General Manager