Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
3 Nov 2015
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹1.00 lakh on Chaitanya Co-operative Urban Bank Ltd., Hyderabad, Telangana, under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank violated its guidelines/directives on loans and advances to directors and their relatives. After issuing a show-cause notice and considering the bank’s written reply, RBI concluded that the violations were substantiated and warranted penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after concluding that the bank had violated RBI guidelines/directives relating to loans and advances to directors and their relatives. The bank had received a show-cause notice and submitted a written reply, but RBI found the violations substantiated and deserving of penalty.
Operating Impact
The bank must absorb the monetary penalty; the release does not mention any operational restriction or license action. The immediate impact is financial and reputational, while the underlying compliance expectation remains that the bank should avoid sanctioned lending to directors and their relatives.
Regulatory Basis
- Section 47A (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 1.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank