Recorded RBI impact
Fine: Rs 1.50 L
Monetary penalty · Fresh imposition
Published by RBI
30 Nov 2023
Case Brief
By an order dated October 30, 2023, RBI imposed a monetary penalty of Rs 1.50 lakh on Patan Nagarik Sahakari Bank Ltd., Patan, Gujarat for non-compliance with RBI directions relating to loans and advances to directors, relatives and firms/concerns in which they are interested, as well as placement of deposits with other banks by primary urban co-operative banks. RBI said the statutory inspection revealed that the bank sanctioned a loan where a relative of a director stood as guarantor and also breached the prudential inter-bank counterparty exposure limit. The penalty was imposed under Section 47-A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty on Patan Nagarik Sahakari Bank Ltd., Patan, Gujarat under Section 47-A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The statutory inspection found that the bank had sanctioned a loan where a relative of one of its directors was a guarantor, and had breached the prudential inter-bank counterparty exposure limit, amounting to non-compliance with RBI directions on loans and advances to directors/related parties and on placement of deposits with other banks by UCBs.
Operating Impact
The bank must bear the monetary penalty and ensure future compliance with RBI directions on related-party lending and inter-bank exposure limits. No restriction on operations, deposits, or onboarding was announced in this release, so the forward-looking impact is limited to compliance and supervisory consequences.
Regulatory Basis
- Section 47-A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 1.50 L
- Order Date
- 30 Oct 2023
- Effective From
- 30 Oct 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank