Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
9 Oct 2018
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5.00 lakh on Sir M Vishvesvaraya Co-operative Bank Ltd., Bengaluru, under Section 47A(1)(c) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI found that the bank granted housing loans of more than Rs 70 lakh per beneficiary, contrary to the applicable RBI circular, and also extended a donation to a trust where a director of the bank was an administrator, violating another RBI circular. After issuing a show-cause notice and considering the bank's written reply, RBI held the violations to be substantiated and imposed the penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after finding that Sir M Vishvesvaraya Co-operative Bank Ltd. violated RBI directives by granting housing loans of more than Rs 70 lakh per beneficiary and by extending a donation to a trust where a director of the bank was an administrator. A show-cause notice was issued, the bank replied in writing, and RBI concluded the violations were substantiated and warranted penalty.
Operating Impact
The bank must absorb the monetary penalty; the order does not state any suspension, restriction, or withdrawal of operations. The case signals continued compliance expectations around housing-loan limits and governance-related transactions involving directors or connected trusts.
Regulatory Basis
- Section 47 A (1) (c) read with Section 46 (4) of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank