Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
4 Feb 2019
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 50,000 on Bidar Mahila Co-operative Bank Limited, Bidar, Karnataka, under Section 47A read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank violated its extant norms on grant of loans to directors and their specified relatives. After a show-cause notice and the bank's written reply, RBI concluded that the violations were substantiated and that monetary penalty was warranted.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after finding that Bidar Mahila Co-operative Bank Limited had violated extant RBI norms governing loans to directors and their specified relatives. The bank had submitted a reply to a show-cause notice, but RBI concluded the violations were substantiated and warranted penalty.
Operating Impact
The bank must absorb the penalty and remain compliant with RBI’s lending norms, especially restrictions relating to loans to directors and their specified relatives. The action does not indicate a broader operational restriction, but it signals heightened regulatory scrutiny over governance and related-party lending practices.
Regulatory Basis
- Section 47 A
- Section 46 (4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank