The Reserve Bank of India (RBI) has taken regulatory action against Aryavart Bank, Lucknow, by imposing a monetary penalty of ₹36.40 lakh (Rupees Thirty-Six Lakh and Forty Thousand only). This action was formalized through an order issued on March 28, 2025. The penalty was imposed due to the bank’s failure to comply with certain provisions of the Banking Regulation Act, 1949 (BR Act)—specifically, Section 26A read with Section 51(1). These provisions govern the transfer of unclaimed deposits to the Depositor Education and Awareness (DEA) Fund, which is managed by RBI.
Why Was the Penalty Imposed?
The issue came to light during a statutory inspection of Aryavart Bank, which was conducted by the National Bank for Agriculture and Rural Development (NABARD). This inspection was based on the bank’s financial position as of March 31, 2023.
During the inspection, NABARD identified certain regulatory violations, particularly concerning the bank’s failure to transfer eligible unclaimed deposits to the DEA Fund within the prescribed time. Unclaimed deposits refer to amounts that remain untouched by account holders for a long period and are meant to be transferred to the DEA Fund to ensure proper handling and potential return to rightful owners if claimed later.
Regulatory Process Followed
Upon identifying the non-compliance, RBI issued a show-cause notice to Aryavart Bank, asking why a penalty should not be imposed for violating statutory provisions. The bank was given an opportunity to respond to the notice and present its case, including making oral submissions during a personal hearing.
After carefully reviewing the bank’s response and considering the evidence, RBI concluded that the bank had indeed violated the regulations by not transferring the unclaimed deposits to the DEA Fund in time. As a result, the penalty was imposed under the authority granted by Section 47A(1)(c), read with Sections 46(4)(i) and 51(1) of the BR Act.
Important Clarifications
It is important to note that this penalty was imposed solely due to deficiencies in regulatory compliance. It does not question the validity of any transactions or agreements that Aryavart Bank has entered into with its customers.
Additionally, this action does not prevent RBI from taking further regulatory measures against the bank if required in the future. The penalty serves as a warning and a reminder for banks to strictly adhere to regulatory guidelines to ensure financial stability and consumer protection.
