Recorded RBI impact
Fine: Rs 6.50 L
Monetary penalty · Fresh imposition
Published by RBI
3 Oct 2023
Case Brief
The Reserve Bank of India imposed a monetary penalty on Dhanera Mercantile Co-operative Bank Ltd., Dhanera, Gujarat, by order dated August 31, 2023. RBI said the bank failed to comply with directions relating to loans and advances to directors, their relatives and connected firms/concerns, loans where directors' relatives acted as guarantors, and placement of deposits with other banks by primary (urban) co-operative banks. The inspection also revealed that the bank sanctioned credit facilities to directors/relatives and breached prudential inter-bank gross exposure and counter-party exposure limits. 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 imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 after its inspection found non-compliance with directions on (i) loans and advances to directors, relatives, and firms/concerns in which they are interested, (ii) loans and advances to directors etc. where relatives stood as sureties/guarantors, and (iii) placement of deposits with other banks by primary (urban) co-operative banks. RBI also noted sanctions of credit facilities to directors/relatives and breaches of prudential inter-bank gross exposure and counter-party exposure limits.
Operating Impact
The bank must absorb the monetary penalty and address the compliance gaps identified by RBI. The order does not invalidate any customer transaction, but it signals continued supervisory scrutiny over lending to connected parties and exposure-limit compliance.
Regulatory Basis
- Section 47 A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 6.50 L
- Order Date
- 31 Aug 2023
- Effective From
- 31 Aug 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank