Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
24 May 2019
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 1,00,000 on Sri Basaveshwar Co-operative Bank Ltd., Basavan Bagewadi, Bijapur, Karnataka under Section 47A read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI found that the bank had violated directives/guidelines by sanctioning loans to the director or relative of a director. After issuing a show-cause notice and considering the bank’s representation in a personal hearing, RBI concluded that the contraventions were substantiated and merited penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) because Sri Basaveshwar Co-operative Bank Ltd. violated RBI directives/guidelines by sanctioning loans to the director/relative of a director of the bank. RBI issued a show-cause notice, the bank sought a personal hearing, and after examining the facts and the bank’s representation, RBI found the violations substantiated and warranted penalty.
Operating Impact
The bank must absorb the monetary penalty; the release does not announce any suspension or operational restriction. The compliance concern is limited to the bank’s lending and governance practices, but the action itself does not directly restrict depositors, borrowers, or counterparties going forward.
Regulatory Basis
- Section 47A read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank