Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
3 May 2013
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 1 lakh on The Bechraji Nagrik Sahakari Bank Ltd., Mehsana (Gujarat). The penalty was imposed under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) for violating RBI Directive No. 5 dated April 29, 2003 read with Section 20 of the Banking Regulation Act, 1949 (AACS). The specific breach was granting loans to directors and their relatives. RBI noted that it had issued a show-cause notice, considered the bank's written reply and personal submissions, and concluded that the violation was substantiated and warranted penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The violation was of RBI Directive No. 5 dated April 29, 2003 read with Section 20 of the B.R. Act, 1949 (AACS), specifically for granting loans to directors and their relatives. RBI said the bank's written reply and personal submissions were considered, but the contravention was substantiated and warranted penalty.
Operating Impact
The bank must absorb the monetary penalty; no business restriction or licence action is described in this release. The finding highlights compliance obligations around connected lending and governance for the bank, but the release itself does not impose any additional forward-looking operational limits.
Regulatory Basis
- Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949
- Section 20 of the B.R. Act, 1949, (AACS)
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 29 Apr 2003
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank