Recorded RBI impact
Fine: Rs 5,000
Monetary penalty · Fresh imposition
Published by RBI
13 Jan 2021
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹0.50 lakh on Alavi Co-operative Bank Ltd., Vadodara (Gujarat) by order dated January 13, 2021. RBI said the bank contravened its directions on loans and advances to directors, relatives, and firms/concerns in which they are interested. The action followed an inspection based on the bank’s financial position as on March 31, 2019, issuance of a show-cause notice, and consideration of the bank’s reply and oral submissions. RBI clarified that the penalty was for regulatory non-compliance and was not intended to pronounce on the validity of any transaction or agreement.
Why RBI Acted
RBI imposed a monetary penalty on Alavi Co-operative Bank Ltd., Vadodara (Gujarat) after an inspection based on the bank’s financial position as on March 31, 2019 found contravention of RBI directions on ‘Loans and Advances to Directors, Relatives and Firms/Concerns in which they are Interested’. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and concluded that the charge of non-compliance was substantiated. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the penalty and address the underlying compliance weakness in related-party lending controls. No explicit operational restriction was imposed, but the bank remains exposed to further supervisory action if similar violations recur.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 5,000
- Order Date
- 13 Jan 2021
- Effective From
- 13 Jan 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank