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UCBs must nominate designated director for PMLA compliance

Current · Source: Reserve Bank of India · RBI/2013-14/497 · issued 18 Feb 2014 · ~1 min read
Quick answerRBI directs Primary (Urban) Co-operative Banks to nominate a director as 'designated director' to ensure compliance with PMLA obligations, following the 2012 amendment empowering the Director to impose fines for non-compliance.
The rule, in the simplest words
How it plays out — a real example

Rajesh, the CEO of a mid-sized urban co-op bank, receives this RBI circular. He calls a board meeting and proposes nominating Mrs. Mehta, a director with legal background, as the designated director. Mrs. Mehta now reviews all KYC procedures and ensures staff report suspicious transactions, protecting the bank from fines.

What changed

The Prevention of Money Laundering (Amendment) Act, 2012 amended Section 13(2), giving the Director the power to issue warnings, direct compliance, require reports, or levy fines ranging from ₹10,000 to ₹1 lakh per failure. RBI now requires UCBs to nominate a director on their boards as the 'designated director' responsible for ensuring compliance with these obligations.

What it means for you

UCBs must formally assign a board-level director to oversee KYC/AML/CFT compliance, making accountability clear and personal. Failure to comply can result in fines on the bank, the designated director, or employees, so this role carries real personal risk. Banks should update their governance structures and ensure the designated director is fully briefed on PMLA duties.

What you must do

Who it affects

Primary (Urban) Co-operative Banks (UCBs), Board of Directors of UCBs, Compliance officers and staff handling KYC/AML/CFT, Designated directors (new role)

❓ Common questions

What is the fine range for non-compliance under the amended Section 13(2)?

The fine is not less than ₹10,000 and may extend up to ₹1 lakh for each failure.

Who can be nominated as the designated director?

Any director on the board of the UCB can be nominated as the designated director to ensure compliance with PMLA obligations.

Does this circular apply to all UCBs?

Yes, it applies to all Primary (Urban) Co-operative Banks, as addressed to their Chief Executive Officers.

📜 Read the original circular — full text as issued by RBI
Notifications - Reserve Bank of India Skip to main content Selected Selected Change Language हिंदी Search the Website Search Home About Us ▼ About Us Organisation & Functions ▶ Organisation Structure Departments Offices Training Establishment ▶ College of Agricultural Banking Reserve Bank Staff College College of Supervisors RBI's Functions and Working Governors Deputy Governors Executive Directors Communication Policy of RBI Sources of Information ▶ Annual Publications Half-yearly Publications Quarterly Publications Monthly Publications Weekly Publications Occasional Publications SDDS NSDP Data Releases Publications available on Subscription General Information RBI History Museum ▶ The RBI Museum RBI Monetary Museum Notification ▼ Notifications Master Directions Master Circulars Amendment Directions Draft Notifications/Guidelines ▶ Draft Notifications/Guidelines Draft Directions (RE-wise) Index To RBI Circulars Standalone Circulars Circulars Withdrawn Press Releases Speeches & Media Interactions ▼ Speeches Media Interactions Memorial Lectures Podcasts Publications ▼ Biennial Annual Half-Yearly Quarterly Bi-monthly Monthly Weekly Occasional Reports Working Papers Legal Framework ▼ Act Rules Regulations Schemes Research ▼ External Research Schemes RBI Occasional Papers Working Papers RBI Bulletin History DRG Studies KLEMS State Statistics and Finances Statistics ▼ Data Releases Database on Indian Economy Public Debt Statistics Regulatory Reporting ▼ List of Returns Data Definition Validation rules/ Taxonomy List of RBI Reporting Portals FAQs of RBI Reporting Portals Home Notifications Notifications ( 50 kb ) Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 – Amendment to Section 13(2) – Primary (Urban) Cooperative Banks (UCBs) RBI/2013-14/497 UBD.BPD (PCB) Cir.No. 48/14.01.062/2013-14 February 18, 2014 The Chief Executive Officer All Primary (Urban) Co-operative Banks. Madam / Dear Sir, Know Your Customer (KYC) Norms /Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under Prevention of Money Laundering Act (PMLA), 2002 – Amendment to Section 13(2) – Primary (Urban) Cooperative Banks (UCBs) Please refer to our Master Circular UBD.BPD. (PCB).MC.No.16/12.05.001/2013-14 dated July 1, 2013 on Know Your Customer (KYC) Norms / Anti-Money Laundering (AML) Standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002. 2. With the enactment of Prevention of Money Laundering (Amendment) Act, 2012 and amendment to Section 13 of the Act which provides for “Powers of Director to impose fine”, the section 13 (2) now reads as under: “If the Director, in the course of any inquiry, finds that a reporting entity or its designated director on the Board or any of its employees has failed to comply with the obligations under this Chapter, then, without prejudice to any other action that may be taken under any other provisions of this Act, he may — (a) issue a warning in writing; or (b) direct such reporting entity or its designated director on the Board or any of its employees, to comply with specific instructions; or (c) direct such reporting entity or its designated director on the Board or any of its employees, to send reports at such interval as may be prescribed on the measures it is taking; or (d) by an order, levy a fine on such reporting entity or its designated director on the Board or any of its employees, which shall not be less than ten thousand rupees but may extend to one lakh rupees for each failure.” 3. In view of the above amendment, UCBs may nominate a Director on their Boards as “designated Director” to ensure compliance with the obligations under the Prevention of Money Laundering (Amendment) Act, 2012. Yours faithfully, (A.K. Bera) Principal Chief General Manager 2026 All Months January February March April May June July August September October November December 2025 All Months January February March April May June July August September October November December 2024 All Months January February March April May June July August September October November December 2023 All Months January February March April May June July August September October November December 2022 All Months January February March April May June July August September October November December 2021 All Months January February March April May June July August September October November December 2020 All Months January February March April May June July August September October November December 2019 All Months January February March April May June July August September October November December 2018 All Months January February March April May June July August September October November December 2017 All Months January February March April May June July August September October November December Archives 2016 All Months January February March April May June July August September October November December 2015 All Months January February March April May June July August September October November December 2014 All Months January February March April May June July August September October November December 2013 All Months January February March April May June July August September October November December 2012 All Months January February March April May June July August September October November December 2011 All Months January February March April May June July August September October November December 2010 All Months January February March April May June July August September October November December 2009 All Months January February March April May June July August September October November December 2008 All Months January February March April May June July August September October November December 2007 All Months January February March April May June July August September October November December 2006 All Months January February March April May June July August September October November December 2005 All Months January February March April May June July August September October November December 2004 All Months January February March April May June July August September October November December 2003 All Months January February March April May June July August September October November December 2002 All Months January February March April May June July August September October November December 2001 All Months January February March April May June July August September October November December 2000 All Months January February March April May June July August September October November December 1999 All Months January February March April May June July August September October November December 1998 All Months January February March April May June July August September October November December 1997 All Months January February March April May June July August September October November December 1996 All Months January February March April May June July August September October November December 1995 All Months January February March April May June July August September October November December 1994 All Months January February March April May June July August September October November December 1993 All Months January February March April May June July August September October November December 1992 All Months January February March April May June July August September October November December 1991 All Months January February March April May June July August September October November December Top Back to previous page More Links Bank Holidays Banking Glossary Citizen's Charter Complaints Contact Us COVID-19 Measures E-LMS Events FAQs Financial Education Forms IFSC/MICR Codes Important Websites Opportunities @ RBI RBI Clarifications RBI Kehta Hai RBI’s Vision and Values (1257 kb)--> Right to Information Act Tenders Follow RBI RSS Twitter YouTube Instagram Facebook LinkedIn © Reserve Bank of India. 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Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/497 · issued 18 Feb 2014. The plain-English explanation above is BankPulse’s own independent summary.
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Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (Primary (Urban) Co-operative Banks (UCBs), Board of Directors of UCBs, Compliance officers and staff handling KYC/AML/CFT, Designated directors (new role)), your first concrete step on “UCBs must nominate designated director for PMLA compliance” is: “Nominate a director on your board as the 'designated director' for PMLA compliance.” (RBI issued this 18 Feb 2014).

  1. Circular: RBI/2013-14/497 -- UCBs must nominate designated director for PMLA compliance
  2. Issued: 18 Feb 2014
  3. Action required: Nominate a director on your board as the 'designated director' for PMLA compliance.
  4. Action required: Document the nomination in board minutes and inform all relevant staff.
  5. Action required: Ensure the designated director understands the full scope of KYC/AML/CFT obligations under PMLA.
  6. Action required: Review your compliance framework to align with the amended Section 13(2) powers.
  7. Action required: Prepare for potential fines by strengthening internal controls and reporting mechanisms.
  8. Owner: ____________ Target date: ____________
  9. Board/committee approval needed? Y / N
  10. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly).
Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=8749&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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