Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
25 Oct 2011
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5.00 lakh on Pravara Sahakari Bank Ltd., Ahmednagar, Maharashtra under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI found that the bank had violated directives/guidelines on the maximum limit on advances by sanctioning loans to trusts managing different colleges in excess of the single borrower norm. After examining the bank's written reply and submissions made during the personal hearing, RBI concluded that the contravention was substantiated and warranted the penalty.
Why RBI Acted
The Reserve Bank of India imposed a penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The bank violated RBI directives/guidelines on the maximum limit on advances, by sanctioning loans to trusts managing different colleges in excess of the single borrower norm. RBI considered the bank's written reply and personal hearing submissions, concluded the violation was substantiated, and imposed the penalty.
Operating Impact
The bank must bear the monetary penalty; the release does not indicate any additional operational restriction or licence impact. The underlying conduct relates to lending concentration limits, so the case signals continued compliance expectations on borrower exposure norms for the bank.
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 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank