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Madheshwari Urban Development Co-operative Bank Ltd., Madha, Maharashtra

Co-operative bankMadha, Maharashtra

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 1.00 L

Monetary penalty · Fresh imposition

S1

Published by RBI

4 Mar 2011

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 1.00 lakh on Madheshwari Urban Development Co-operative Bank Ltd., Madha, Maharashtra, under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS). RBI found that the bank sanctioned unsecured salary loans beyond the prescribed ceiling, exceeded the permissible unsecured advances limit of 15% of NDTL, and granted unsecured advances to an entity whose Chairman was the same person as the bank’s Chairman. After a show-cause notice and consideration of the bank’s written reply, RBI concluded that the violations were substantiated and warranted the penalty.

Why RBI Acted

Lending normsGovernance oversight

RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS) after finding that the bank had (a) sanctioned unsecured advances (salary loans) beyond the prescribed ceiling of Rs 1 lakh, (b) allowed its total unsecured advances to exceed the permissible 15% of Net Demand and Time Liabilities (NDTL), and (c) granted unsecured advances to Vithalrao Shinde Sahkari Sakhar Karkhana Maryadit where the Chairman of that entity and the bank’s Chairman were the same person. The bank received a show-cause notice and its written reply was considered, but RBI concluded the violations were substantiated and imposed the penalty.

Operating Impact

The bank must absorb the monetary penalty and continue operating in compliance with RBI’s unsecured lending limits and related-party governance expectations. The action does not indicate any additional operational restriction beyond the fine, but it signals heightened compliance expectations for lending controls and conflict-of-interest oversight.

Regulatory Basis

  • Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS)

Action Facts

Primary Impact
Fine: Rs 1.00 L
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank