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Mehsana Nagrik Sahakari Bank Limited, Mehsana, Gujarat

Co-operative bankMehsana, Gujarat

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

Recorded RBI impact

Fine: Rs 7.00 L

Monetary penalty · Fresh imposition

S2

Published by RBI

18 Jan 2024

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹7.00 lakh on Mehsana Nagrik Sahakari Bank Limited, Mehsana, Gujarat, by order dated December 29, 2023. The penalty followed a statutory inspection and subsequent examination of the inspection and risk assessment reports, which found that the bank had sanctioned loans in cases where a relative of a director acted as guarantor, failed to pay interest on overdue matured term deposits at the applicable rate from maturity until repayment, and failed to transfer the eligible amount to the Depositor Education and Awareness Fund. RBI held that these actions constituted non-compliance with its directions on loans and advances to directors/related parties and deposits, as well as a contravention of section 26A(2) read with section 56 of the Banking Regulation Act, 1949.

Why RBI Acted

Lending normsCustomer protectionReporting & disclosure

RBI imposed a monetary penalty after a statutory inspection found that the bank had sanctioned loans where a relative of one of its directors stood as guarantor, had not paid interest on overdue matured term deposits from the date of maturity until repayment at the applicable rate, and had not transferred the eligible amount to the Depositor Education and Awareness Fund. The penalty was imposed for non-compliance with RBI directions on loans and advances to directors and related interests, interest rate on deposits, and for contravention of section 26A(2) read with section 56 of the Banking Regulation Act, 1949, under section 47A(1)(c) read with sections 46(4)(i) and 56 of the BR Act.

Operating Impact

The bank must pay the monetary penalty and remain compliant with the cited RBI directions and statutory provisions going forward. The action does not alter the bank’s licence or business operations, but it underscores obligations around related-party lending, deposit interest treatment, and timely transfer to the Depositor Education and Awareness Fund for the benefit of depositors.

Regulatory Basis

  • section 26A (2) read with section 56 of the Banking Regulation Act, 1949
  • section 47A(1)(c) read with sections 46(4)(i) and 56 of the BR Act

Action Facts

Primary Impact
Fine: Rs 7.00 L
Order Date
29 Dec 2023
Effective From
29 Dec 2023
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank