Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
29 Mar 2017
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹50,000 on Pragathi Cooperative Bank Ltd., Bengaluru, Karnataka, under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank violated its instructions/guidelines on housing, real estate and commercial real estate sector exposure, risk categorization/risk profiling of customers, and updation of old accounts. The bank had received a show-cause notice, sought a personal hearing, and submitted a written reply before RBI concluded that the violations were substantiated and warranted a penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies), after a show-cause notice, personal hearing, and written reply. The bank was found to have breached RBI instructions/guidelines relating to housing, real estate and commercial real estate sector, customer risk categorization/risk profiling, and updation of old accounts.
Operating Impact
The bank must bear the monetary penalty; the release does not indicate any additional restriction on operations or business lines. The forward-looking impact is limited to the financial penalty and the compliance signal to tighten lending and customer risk-management practices.
Regulatory Basis
- Section 47 A (1) (b) read with Section 46 (4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank