Recorded RBI impact
Fine: Rs 3.00 L
Monetary penalty · Fresh imposition
Published by RBI
19 Oct 2023
Case Brief
RBI imposed a monetary penalty on People’s Co-operative Bank Ltd., Dholka, Gujarat by order dated September 18, 2023. The penalty was issued under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after RBI’s inspection found that the bank had sanctioned a loan to a relative of one of its directors and had failed to pay interest on overdue term deposits from maturity until repayment at the applicable rate. RBI concluded that the non-compliance with its directions on loans and advances to directors/relatives and on interest rate for deposits was substantiated and warranted the penalty.
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. In its inspection of the bank with reference to its financial position as on March 31, 2022, RBI found that the bank had sanctioned a loan to a relative of one of its directors and had not paid interest on overdue term deposits from the date of maturity till repayment at the applicable rate, constituting non-compliance with RBI directions on related-party lending and deposit interest obligations.
Operating Impact
The bank must bear the monetary penalty of ₹3 lakh; the order does not itself impose an operational restriction, but it signals supervisory non-compliance that may invite closer regulatory scrutiny. Depositors affected by overdue term-deposit handling and connected parties involved in related-party lending are the underlying impacted stakeholders.
Regulatory Basis
- Section 47 A (1) (c) read with Section 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 3.00 L
- Order Date
- 18 Sept 2023
- Effective From
- 18 Sept 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank