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Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Vadodara (Gujarat)

Co-operative bankVadodara, Gujarat

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

Recorded RBI impact

Fine: Rs 2.00 L

Monetary penalty · Fresh imposition

S1

Published by RBI

7 Mar 2022

Case Brief

RBI imposed a monetary penalty of ₹2.00 lakh on Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Vadodara (Gujarat) for contravention of RBI directions on loans and advances to directors, relatives and firms/concerns in which they are interested, and for non-compliance with specific directions dated December 07, 2017 issued under the Supervisory Action Framework (SAF). The inspection found that the bank had extended credit facilities to a firm in which one director was interested and to firms in which directors’ relatives were interested, and had also breached the reduced single-party exposure limit in certain customer loan accounts. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and then imposed the penalty under the Banking Regulation Act, 1949.

Why RBI Acted

Lending normsCapital & exposure norms

RBI found, based on its statutory inspection as of March 31, 2019 and related correspondence, that the bank had contravened RBI directions on loans and advances to directors, relatives and firms/concerns in which they are interested. It also failed to comply with specific directions dated December 07, 2017 issued under the Supervisory Action Framework (SAF), including breaching the reduced single-party exposure limit in certain customer loan accounts. RBI concluded the charges were substantiated and imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.

Operating Impact

The bank must absorb the ₹2 lakh penalty and continue operating subject to the same regulatory expectations. The release does not announce a new restriction, but it records past non-compliance that may inform future supervisory scrutiny, especially around related-party lending and exposure limits.

Regulatory Basis

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

Action Facts

Primary Impact
Fine: Rs 2.00 L
Order Date
4 Mar 2022
Effective From
4 Mar 2022
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank