Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
11 Aug 2010
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs. 5 lakh on Brahmadeodada Mane Sahakari Bank Ltd., Solapur, Maharashtra. The penalty was levied under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) for several violations, including unsecured credit breaches, remission of debt in borrowal accounts, waiver of bank guarantee commission to insiders/related parties, inaccurate reporting to RBI, lending to primary co-operative societies, diversion of loan proceeds to director-linked concerns, unsecured advances beyond prudential limits, donations above limits, and KYC/AML non-compliance in some accounts. RBI issued a show cause notice, considered the bank's written reply, and concluded that the violations were substantiated and warranted penalty.
Why RBI Acted
The Reserve Bank of India imposed a penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after finding the bank had violated guidelines relating to granting unsecured credit facilities, remission of debt in various borrowal accounts, waiver of bank guarantee commission to the Chairman/director/relatives or related firms/companies, submission of inaccurate information to RBI regarding credit facilities to a director and relatives, granting credit facilities to primary co-operative societies, granting loans to individuals with diversion of funds to director-linked concerns, granting unsecured advances beyond prudential individual limits, making donations above prudential limits, and not ensuring compliance with KYC/AML guidelines in some loan accounts. The bank replied to a show cause notice, but RBI concluded the violations were substantiated and warranted penalty.
Operating Impact
The bank must bear the monetary penalty, and the action serves as a compliance signal regarding lending discipline, related-party dealings, truthful regulatory reporting, prudential limits, and KYC/AML controls. No direct operational restriction is described in the release, but the bank remains accountable for correcting the underlying control weaknesses.
Regulatory Basis
- Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank