Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
14 Nov 2022
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 50,000 on Krishna Mercantile Co-operative Bank Ltd., Bhopal (M.P.) by order dated November 09, 2022. The penalty was for contravention / non-compliance with RBI directions to urban co-operative banks on Exposure Norms & Statutory/Other Restrictions, after RBI found the bank had exceeded the prudential inter-bank (gross) exposure limit. RBI said the action was based on regulatory deficiencies and not intended to pronounce on the validity of transactions with customers.
Why RBI Acted
RBI found that Krishna Mercantile Co-operative Bank Ltd., Bhopal (M.P.) had contravened / failed to comply with directions issued by RBI to urban co-operative banks on Exposure Norms & Statutory/Other Restrictions. The Risk Assessment Report for the bank's financial position as on March 31, 2021 showed that it had exceeded the prudential inter-bank (gross) exposure limit. After a show-cause notice, replies, and oral submissions, RBI concluded the charge was substantiated and imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must bear the penalty and address the compliance lapse, particularly its exposure-limit controls and adherence to RBI directions. The order does not itself alter customer transactions, but it signals heightened regulatory scrutiny of the bank's compliance practices.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Order Date
- 9 Nov 2022
- Effective From
- 9 Nov 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank