Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
29 Jan 2024
Case Brief
RBI, by order dated January 08, 2024, imposed a monetary penalty on Krushiseva Urban Co-operative Bank Limited, Kole, Solapur, Maharashtra for non-compliance with RBI directions on loans and advances to directors and their relatives, board-related directions for UCBs, exposure norms and statutory/other restrictions, and specific directions issued under the Supervisory Action Framework. RBI’s inspection found that the bank sanctioned loans to directors and their relatives and incurred capital expenditure without prior approval of RBI. After considering the bank’s reply and submissions, RBI concluded that the charges were substantiated and warranted penalty under 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 that the bank had sanctioned loans to directors and their relatives and had incurred capital expenditure without prior approval of RBI, in violation of specific directions issued under the Supervisory Action Framework (SAF) and other RBI directions relating to loans and advances to directors, board governance, and exposure norms/statutory restrictions for UCBs.
Operating Impact
The bank must absorb the penalty and continue complying with RBI’s directions, including restrictions on lending to directors and related parties and prior-approval requirements for capital expenditure. The action does not invalidate customer transactions, but it signals ongoing supervisory non-compliance and heightened regulatory scrutiny.
Regulatory Basis
- section 47A(1)(c)
- sections 46(4)(i)
- section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Order Date
- 8 Jan 2024
- Effective From
- 8 Jan 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank