RBI Imposes Rs.4 Lakh Fine on Prime Bank in Surat

The Prime Co-operative Bank’s failure to ensure robust cybersecurity measures and customer support services has underscored the need for urban cooperative banks to prioritize compliance with RBI directives.

By Times News Network On Dec 31, 2024

RBI penalty on Prime Co-operative Bank, the blunt times

Surat : The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹4 lakh on The Prime Co-operative Bank Ltd., Surat, for failing to comply with key guidelines on customer protection and cybersecurity. The penalty was enforced through an order dated December 26, 2024, citing violations of RBI directives regarding unauthorized electronic banking transactions and the prescribed cybersecurity framework for primary urban cooperative banks.

The RBI conducted a statutory inspection of the bank’s financial position as of March 31, 2023. The inspection revealed deficiencies in regulatory compliance, prompting RBI to issue a notice to the bank. The notice required the bank to explain why a penalty should not be imposed for its lapses. After reviewing the bank’s written response and oral submissions during a personal hearing, the RBI confirmed multiple violations, necessitating the penalty.

According to the RBI, the bank failed to provide facilities for customers to report unauthorized electronic transactions via SMS, email, and a toll-free number, enable instant response options for SMS and email alerts related to banking transactions, and implement specific cybersecurity control measures mandated under the RBI’s Cyber Security Framework for urban cooperative banks.

The RBI clarified that the penalty reflects deficiencies in regulatory compliance and does not question the validity of any transactions or agreements between the bank and its customers. Furthermore, the action does not preclude the RBI from initiating additional measures against the bank.

This penalty highlights the importance of stringent adherence to cybersecurity and customer protection norms, particularly in an era of increasing electronic banking transactions.

The Prime Co-operative Bank’s failure to ensure robust cybersecurity measures and customer support services has underscored the need for urban cooperative banks to prioritize compliance with RBI directives. The penalty serves as a cautionary reminder for financial institutions to bolster their cybersecurity frameworks and enhance mechanisms to safeguard customer interests.