Recorded RBI impact
Fine: Rs 3.50 L
Monetary penalty · Fresh imposition
Published by RBI
18 Sept 2023
Case Brief
RBI, by an order dated August 22, 2023, imposed a monetary penalty of Rs 3.50 lakh on The Co-operative Bank of Mehsana Ltd., Mehsana, Gujarat under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The penalty followed a statutory inspection of the bank as of March 31, 2022, which found that the bank had sanctioned loans where a relative of one of the directors stood as guarantor and had breached the inter-bank counterparty exposure limit. RBI concluded that the bank had not complied with its directions on loans and advances to directors, relatives and related concerns, as well as placement of deposits with other banks by primary urban co-operative banks.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The statutory inspection found that the bank had sanctioned loans where a relative of one of its directors stood as guarantor and had breached the inter-bank counterparty exposure limit, amounting to non-compliance with RBI directions on loans and advances to directors/relatives and on placement of deposits with other banks by UCBs.
Operating Impact
The bank must absorb the monetary penalty; the order does not itself impose an operational restriction or suspension. The finding may increase supervisory scrutiny, and the underlying compliance lapses remain relevant for the bank's governance, lending, and exposure-management controls.
Regulatory Basis
- Section 47 A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 3.50 L
- Order Date
- 22 Aug 2023
- Effective From
- 22 Aug 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank