Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
4 Oct 2021
Case Brief
By an order dated October 1, 2021, RBI imposed a monetary penalty of ₹1.00 lakh on Balasinor Nagrik Sahakari Bank Ltd., Balasinor, Dist. Mahisagar (Gujarat). The penalty was for non-compliance with RBI directions on loans and advances to directors, relatives, and firms/concerns in which they are interested. RBI said the violation was identified during statutory inspection for the bank's financial position as on March 31, 2019, and that the breach was confirmed after a show-cause notice, the bank's reply, and oral submissions at the hearing. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI found, based on its statutory inspection with reference to the bank's financial position as on March 31, 2019 and examination of related correspondence, that the bank had not complied with RBI directions governing loans and advances to directors, relatives, and firms/concerns in which they are interested. After a show-cause notice, reply, and oral hearing, RBI concluded the charge was substantiated and imposed a monetary penalty 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 financial penalty and continue complying with RBI directions governing related-party lending. The order does not invalidate any individual transaction, but it signals supervisory non-compliance and may heighten scrutiny of the bank's lending controls and governance practices.
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 1.00 L
- Order Date
- 1 Oct 2021
- Effective From
- 1 Oct 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank