Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
27 Mar 2023
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 2.00 lakh on Aligarh Zila Sahkari Bank Ltd., Aligarh, Uttar Pradesh, by order dated March 22, 2023. The penalty was imposed for contravention of section 20 read with Section 56 of the Banking Regulation Act, 1949 after a NABARD inspection found that the bank had granted unsecured loans/advances to its director. RBI said the breach was substantiated and invoked Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Act.
Why RBI Acted
RBI imposed a monetary penalty after NABARD's inspection report (financial position as on March 31, 2021) found that Aligarh Zila Sahkari Bank Ltd. had granted unsecured loans/advances to its director, violating section 20(1) read with Section 56 of the Banking Regulation Act, 1949. RBI concluded the non-compliance was substantiated and penalized the bank under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Act.
Operating Impact
The bank must absorb the monetary penalty, but the release does not impose any new operating restriction or cancellation. The action primarily affects the bank and reflects regulatory non-compliance findings relating to lending to a director.
Regulatory Basis
- section 20 read with Section 56 of the Banking Regulation Act, 1949
- Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949
- section 20(1) read with Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Order Date
- 22 Mar 2023
- Effective From
- 22 Mar 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank