Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
14 Aug 2012
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5 lakh on Rupee Co-operative Bank Ltd., Pune (Maharashtra) under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949. The penalty followed a statutory inspection under Section 35, which found that the bank had granted term loans and fresh cash credit limits to borrowers beyond the RBI-prescribed ceiling of Rs 10 lakh, including 4 cases of excess cash credit sanctions. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and then concluded that the violations were substantiated.
Why RBI Acted
In a statutory inspection under Section 35 of the Banking Regulation Act, RBI found that the bank had violated RBI instructions issued vide letter dated June 23, 2004 by granting term loans to some borrowers well in excess of the operational limit of Rs 10 lakh. It also sanctioned fresh cash credit limits to existing borrowers above Rs 10 lakh in 4 cases. After a show-cause notice, the bank’s written reply, and personal submissions were considered, RBI concluded that the contraventions were substantiated and imposed a penalty under Section 47A(1)(b) read with Section 46(4) of the Act.
Operating Impact
The bank must absorb the penalty and remain compliant with RBI lending instructions going forward. The action does not itself impose a business restriction, but it signals heightened supervisory scrutiny over credit sanctions and loan-limit adherence.
Regulatory Basis
- Section 47A (1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
- Section 35 of the Act
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Order Date
- 23 Jun 2004
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank