Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
28 Oct 2024
Case Brief
By an order dated October 21, 2024, RBI imposed a monetary penalty of ₹2.00 lakh on Prerna Nagari Sahakari Bank Limited, Aurangabad, Maharashtra. The penalty was imposed after a statutory inspection and show-cause proceedings, which found that the bank had sanctioned a loan to a firm in which a relative of a director was interested, and the director also stood as guarantor for the loan. RBI cited non-compliance with its directions on loans and advances to directors, their relatives, and firms/concerns in which they are interested, under the Banking Regulation Act, 1949.
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, after a statutory inspection and subsequent show-cause process. The sustained charge was that the bank sanctioned a loan to a firm in which a relative of a director was interested, while the same director acted as guarantor for the loan, contrary to RBI directions on loans and advances to directors, their relatives, and firms/concerns in which they are interested.
Operating Impact
The bank must absorb the penalty and remain mindful of compliance controls around connected lending and director-related exposures. The order does not describe any operational restriction on deposit-taking or lending beyond the fine, but RBI noted that further action could still be initiated separately.
Regulatory Basis
- section 47A(1)(c)
- sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Order Date
- 21 Oct 2024
- Effective From
- 21 Oct 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank