The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 10 million on Dhanlaxmi Bank, a private sector lender, for violation of Know Your Customer (KYC) norms and Anti Money Laundering (AML) standards.

RBI said, "The penalty has been imposed in exercise of powers vested in the Reserve Bank under the provisions of section 47(A)(1)(c) read with section 46(4)(i) of the Banking Regulation Act, 1949, taking into account the violations of the instructions, directions, guidelines issued by the RBI from time to time."

"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 and its customers," it added.

RBI had issued a show cause notice to the bank for not having complied with the KYC and AML guidelines in respect of a current account under investigation of the economic offences wing, Mumbai.

After considering the bank's reply, as also, personal submissions, information submitted and documents furnished, the Reserve Bank came to the conclusion that the bank had violated the instructions or guidelines issued, from time to time, which warranted imposition of monetary penalty on it.

Shares of the bank declined Rs 0.4, or 1.52%, to settle at Rs 25.90. The total volume of shares traded was 102,006 at the BSE (Thursday).