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Shree Chhani Nagarik Sahakari Bank Limited, Vadodara (Gujarat)

Co-operative bankVadodara, Gujarat

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 4.00 L

Monetary penalty · Fresh imposition

S2

Published by RBI

3 Apr 2023

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 4.00 lakh on Shree Chhani Nagarik Sahakari Bank Limited, Vadodara (Gujarat) through an order dated March 29, 2023. The penalty was imposed for contravention of several RBI directions, including those on professionalisation of boards of urban co-operative banks, prudential income recognition/asset classification/provisioning norms, loans and advances to directors and sureties/guarantors, fraud monitoring and reporting in UCBs, and KYC direction requirements. RBI said its inspection and subsequent review found that the bank had purchased an employee insurance policy from a director who was also an insurance agent, had not identified NPAs on an ongoing basis, had sanctioned a loan with a director’s relative as surety/guarantor, had not reported five fraud cases within the prescribed timeline, and had not carried out periodic account updation as required. RBI clarified that the penalty was for regulatory non-compliance and not a judgment on customer transactions.

Why RBI Acted

Governance oversightLending normsCustomer protectionKYC / AMLOther

RBI imposed a penalty of Rs 4.00 lakh on Shree Chhani Nagarik Sahakari Bank Limited, Vadodara (Gujarat) under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The bank was found to have bought an insurance policy for employees from a director who was also an agent of the insurance company, failed to identify assets as NPAs on an ongoing basis, sanctioned a loan where a relative of a director stood as surety/guarantor, failed to report five fraud cases to RBI within the prescribed timeline, and did not carry out periodic updation of accounts as required. These constituted contraventions of RBI directions on professionalisation of boards of urban co-operative banks, prudential norms, loans and advances to directors/relatives as sureties, fraud monitoring/reporting, and KYC.

Operating Impact

The bank must absorb the financial penalty and address the compliance gaps identified by RBI. The order does not itself impose an operational restriction, but it signals supervisory concern over governance, lending controls, fraud reporting, and KYC processes, which may require remedial action and tighter internal controls going forward.

Regulatory Basis

  • Section 47 A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949

Action Facts

Primary Impact
Fine: Rs 4.00 L
Order Date
29 Mar 2023
Effective From
29 Mar 2023
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank