Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
11 Apr 2011
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 1.00 lakh on Shree Mahalaxmi Mercantile Co-operative Bank Limited, Dabhoi, Dist. Vadodara, Gujarat. The penalty was issued under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS) for violation of operational instructions relating to the sanction of fresh loans and advances. RBI said it had issued a show-cause notice, considered the bank's written reply and personal submissions, and concluded that the violations were substantiated.
Why RBI Acted
RBI imposed a monetary penalty under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS). The bank was found to have violated operational instructions by sanctioning fresh loans and advances; after considering the facts, the bank's written reply, and personal submissions, RBI concluded the violations were substantiated and warranted penalty.
Operating Impact
The bank must bear the monetary penalty; the action does not indicate a withdrawal of business privileges or a broader operating restriction. The immediate impact is financial and supervisory rather than an ongoing cap on operations, though the finding may heighten compliance scrutiny around lending instructions.
Regulatory Basis
- Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank