Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
21 Aug 2023
Case Brief
RBI imposed a monetary penalty of ₹50,000 on Shree Co-operative Bank Limited, Vadodara, Gujarat, by order dated August 11, 2023. The penalty was for non-compliance with RBI’s direction on ‘Loans and advances to directors, relatives, firms/concerns in which they are interested’. RBI said its statutory inspection for the bank’s position as on March 31, 2022, and examination of inspection and risk assessment reports, revealed that the bank had sanctioned a loan where the spouse of one of the bank’s directors stood as surety/guarantor. After a show-cause process, the bank’s reply, and oral submissions at personal hearing, RBI held the charge to be substantiated and imposed the penalty under the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after its statutory inspection and review of related reports/correspondence found that the bank had sanctioned a loan in which the spouse of one of its directors stood as surety/guarantor, contrary to RBI’s direction on loans and advances to directors, relatives, and firms/concerns in which they are interested. After notice, reply, and oral hearing, RBI concluded the non-compliance was substantiated and warranted penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must bear the monetary penalty, but the release does not impose any new operating restriction or cancellation. The action is a compliance enforcement measure and signals scrutiny of lending decisions involving directors and related persons.
Regulatory Basis
- Section 47 A (1) (c)
- Sections 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Order Date
- 11 Aug 2023
- Effective From
- 11 Aug 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank