**Executive Summary**
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1 lakh on The Panchsheel Mercantile Co-operative Bank Ltd., Surat, Gujarat, due to non-compliance with RBI directions on customer protection regarding unauthorized electronic banking transactions. This decision was made on September 25, 2025, following a statutory inspection of the bank's financial position as of March 31, 2024. The penalty is imposed under provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
**Key Points / Main Content**
* **Monetary Penalty Imposition:**
* RBI imposed a monetary penalty of ₹1 lakh on The Panchsheel Mercantile Co-operative Bank Ltd.
* The order was issued on September 25, 2025.
* **Reason for Penalty:**
* The penalty is due to non-compliance with RBI directions on "Customer Protection - Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions."
* The bank failed to enable customers to instantly respond to SMS alerts to notify objections towards unauthorized electronic banking transactions.
* **Basis of Action:**
* The action is based on deficiencies in regulatory compliance.
* The penalty is imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
* The decision follows a statutory inspection conducted with reference to the bank's financial position as on March 31, 2024.
* **Clarifications:**
* The action does not pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
* The monetary penalty does not preclude any other action that may be initiated by RBI against the bank.
**Impact Analysis**
**The Panchsheel Mercantile Co-operative Bank Ltd.**
* **Impact:**
* The bank has incurred a monetary penalty of ₹1 lakh.
* The bank's regulatory compliance is under scrutiny.
* **Action Required:**
* The bank must address the deficiencies in regulatory compliance, specifically enabling customers to respond to SMS alerts.
**Customers of The Panchsheel Mercantile Co-operative Bank Ltd.**
* **Impact:**
* Potentially affected by the bank's non-compliance with customer protection guidelines.
* **Action Required:**
* Customers should remain vigilant regarding their electronic banking transactions and ensure prompt notification of any unauthorized activity.
Key Entities Referenced
Reserve Bank of India (RBI): The regulator imposing the monetary penalty.
The Panchsheel Mercantile Co-operative Bank Ltd., Surat, Gujarat: The bank on which the monetary penalty is imposed.
Banking Regulation Act, 1949: Act under which the RBI imposed penalty; sections 47A(1)(c), 46(4)(i) and 56.
Customer Protection - Limiting Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking Transactions: RBI directions for non-compliance of which the penalty was imposed.
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
September 29, 2025
RBI imposes monetary penalty on The Panchsheel Mercantile Co-operative
Bank Ltd., Surat, Gujarat
The Reserve Bank of India (RBl) has, by an order dated September 25, 2025,
imposed a monetary penalty of ₹1 lakh (Rupees One Lakh only) on The Panchsheel
Mercantile Co-operative Bank Limited, Dist. Surat, Gujarat (the bank) for non-
compliance with certain directions issued by RBI on ‘Customer Protection - Limiting
Liability of Customers of Co-operative Banks in Unauthorised Electronic Banking
Transactions’. 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, RBI found, inter alia, that the following charge against the
bank was sustained, warranting imposition of monetary penalty:
The bank had failed to enable its customers to instantly respond by "Reply" to the
SMS alerts to notify the objection towards unauthorised electronic banking
transactions, if any.
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: 2025-2026/1193 Chief General Manager