Bhandari Co-operative Bank Ltd., Dadar, Maharashtra – Penalised
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs. 5.00 lakh on Bhandari Co-operative Bank Ltd., Dadar, Maharashtra under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI found that the bank sanctioned unsecured advances beyond the prescribed ceiling and engaged in evergreening of accounts by closing non-performing loans, contrary to RBI directives and IRAC guidelines.
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The bank had sanctioned unsecured advances beyond the ceiling of Rs. 50,000 prescribed for a Grade IV bank with DTL of more than Rs. 10 crore, violating RBI's directive on maximum limit on unsecured advances to a single party/connected group. It also resorted to evergreening of accounts by closing non-performing loans, breaching RBI's IRAC guidelines and related instructions.
Severity Assessment
This is a monetary penalty of Rs. 5 lakh, which falls in the >Rs. 2 lakh and <=Rs. 10 lakh band, with no broader operational restriction.
The bank must absorb the penalty and the finding of regulatory non-compliance. While the release does not impose a new operational restriction, it signals RBI's adverse view of the bank's lending controls and asset classification practices.
Published as Bhandari Co-operative Bank Ltd., Dadar, Maharashtra
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