Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
31 Mar 2021
Case Brief
RBI, by order dated March 26, 2021, imposed a monetary penalty of Rs 1 lakh on The Citizens Co-operative Bank Ltd., Rajkot (Gujarat). The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after statutory inspection found non-compliance with RBI directions, especially those governing loans and advances to directors, their relatives, and firms/concerns in which they are interested. The inspection also flagged issues related to board professionalisation and reporting of advances to directors and their relatives, but RBI concluded that the specific charge on loans and advances to interested persons was substantiated.
Why RBI Acted
RBI imposed a monetary penalty after statutory inspection revealed non-compliance with directions relating to loans and advances to directors, their relatives, and firms/concerns in which they are interested. The inspection also noted breaches of directions on board professionalism and reporting of advances to directors and their relatives, but the penalty was ultimately sustained on the charge concerning loans and advances to interested directors/relatives. The action was taken 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 bear the monetary penalty and remain compliant with RBI directions on loans to directors and related interested persons. The order does not invalidate customer transactions, but it signals regulatory non-compliance and may affect the bank’s compliance posture and future supervisory scrutiny.
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 1.00 L
- Order Date
- 26 Mar 2021
- Effective From
- 26 Mar 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank