Case Brief
What Happened
The Reserve Bank of India penalised The Arunachal Pradesh State Co-operative Apex Bank Ltd., Arunachal Pradesh with Rs. 5.00 lakh under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The penalty was imposed because the bank granted unsecured loans to its directors and their relatives, which contravened Section 20(1)(b) of the Act. RBI issued a show-cause notice, considered the bank's written reply, and concluded that the violation was substantiated.