Recorded RBI impact
Fine: Rs 3.00 L
Monetary penalty · Fresh imposition
Published by RBI
21 Aug 2023
Case Brief
By an order dated August 14, 2023, RBI imposed a penalty on Devika Urban Co-operative Bank Ltd., Udhampur, J & K for violating RBI directions on sanction of loans and advances to directors, relatives, and firms/concerns in which they are interested. The supervisory findings noted renewal of a cash credit facility to a sole proprietorship concern linked to the family of a director, and RBI held that the charge was substantiated after considering the bank's reply. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI found that the bank had renewed a cash credit facility granted to a sole proprietorship concern whose proprietor was the wife of the director’s brother. After a supervisory inspection and a show-cause notice, RBI concluded that the bank had failed to comply with directions on sanction of loans and advances to directors, relatives, and related firms/concerns, and imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the Rs 3 lakh penalty; the release does not impose any new operational ban or restriction on business activity. The action signals supervisory non-compliance but does not, by itself, alter depositors' or borrowers' immediate access or rights.
Regulatory Basis
- Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 3.00 L
- Order Date
- 14 Aug 2023
- Effective From
- 14 Aug 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank