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Adarsh Mahila Co-operative Bank Limited

Co-operative bankMuzaffarnagar, Uttar Pradesh

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 5.00 L

Monetary penalty · Fresh imposition

S2

Published by RBI

29 Feb 2024

Case Brief

By order dated February 23, 2024, RBI imposed a monetary penalty of ₹5.00 lakh on Adarsh Mahila Co-operative Bank Limited, Muzaffarnagar, Uttar Pradesh. The penalty was for non-compliance with RBI directions relating to loans and advances to directors, their relatives, and firms/concerns in which they are interested, as well as specific directions issued under the Supervisory Action Framework (SAF). RBI’s inspection, with reference to the bank’s financial position as on March 31, 2022, found that the bank sanctioned a loan in which a director’s relative was interested, offered deposit interest rates higher than State Bank of India rates for various tenors, and sanctioned fresh loans and advances carrying risk weights of more than 100%. RBI held the contraventions substantiated and imposed the penalty under the Banking Regulation Act, 1949.

Why RBI Acted

Lending normsFair practicesCapital & exposure normsGovernance oversight

RBI found, based on statutory inspection and review of related reports/correspondence, that the bank had sanctioned a loan in which a relative of a director was interested, offered deposit interest rates higher than those offered by SBI for various tenors, and sanctioned fresh loans and advances carrying risk weights of more than 100%. RBI concluded that the bank had failed to comply with the relevant directions on loans to directors/related interests and with specific SAF directions, and imposed a penalty under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

Operating Impact

The bank must absorb the monetary penalty and continue complying with RBI’s directions on connected lending, deposit pricing, and risk-weight discipline. The action does not, on this text, impose a new operational restriction, but it signals ongoing supervisory scrutiny and heightened compliance expectations for the bank’s lending and deposit practices.

Regulatory Basis

  • section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949

Action Facts

Primary Impact
Fine: Rs 5.00 L
Order Date
23 Feb 2024
Effective From
23 Feb 2024
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank