Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
20 Feb 2023
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹2.00 lakh on Sudha Co-Operative Urban Bank Ltd., Suryapet, Telangana, by order dated February 15, 2023. RBI said the bank had not complied with directions relating to Board of Directors, Exposure Norms and Statutory/Other Restrictions, and Income Recognition, Asset Classification, Provisioning and related matters applicable to urban co-operative banks. The inspection reports indicated that the bank had extended loans to directors, engaged in ever-greening of director-related loans, and breached single borrower exposure limits. After considering the bank's reply and oral submissions, RBI held the charge substantiated and imposed the penalty under the Banking Regulation Act, 1949 (AACS).
Why RBI Acted
The bank was found, on the basis of inspection reports for financial positions as on March 31, 2019 and March 31, 2020, to have extended loans to directors, resorted to ever-greening of director-related loans, and breached single borrower exposure limits. RBI concluded that the bank had failed to adhere to the relevant directions issued under the Banking Regulation Act, 1949 (AACS), and imposed a penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56.
Operating Impact
The bank must bear the monetary penalty, but the release does not announce any additional operational restriction or license action. The findings also signal continued regulatory scrutiny of lending to directors, related-party loan practices, and exposure-limit compliance.
Regulatory Basis
- Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Order Date
- 15 Feb 2023
- Effective From
- 15 Feb 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank