Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
12 May 2016
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹2.00 lakh on Jalgaon District Co-operative Bank Ltd. under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to cooperative societies). RBI said the bank violated Section 20A of the B.R. Act, 1949 (AACS) by remitting debt due to the bank by Jalgaon Starch Factory, in which the then directors of the bank had an interest, without first obtaining RBI permission. RBI had issued a show-cause notice, considered the bank's written reply, and then concluded that the violation was substantiated and warranted the 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 cooperative societies) because Jalgaon District Co-operative Bank Ltd. violated Section 20A of the B.R. Act, 1949 (AACS). The violation related to remission of debt due to the bank by Jalgaon Starch Factory, in which the then directors of the bank had an interest, without obtaining prior permission from RBI. After issuing a show-cause notice and considering the bank's written reply, RBI concluded the contravention was substantiated and warranted penalty.
Operating Impact
The bank must absorb the financial penalty and ensure future remissions or related-party transactions comply with RBI approval requirements. The action does not indicate any operating restriction, but it signals heightened regulatory scrutiny over governance and conflict-of-interest controls.
Regulatory Basis
- Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Cooperative Societies)
- Section 20 A of the B.R. Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank