Recorded RBI impact
Fine: Rs 3.00 L
Monetary penalty · Fresh imposition
Published by RBI
28 Nov 2022
Case Brief
RBI imposed a monetary penalty of ₹3.00 lakh on The Cumbum Co-operative Town Bank Ltd., Cumbum, Prakasam District, Andhra Pradesh. The penalty was levied for non-adherence to RBI directions on Frauds - Classification and Reporting and Board of Directors - UCBs. RBI said the inspection report (based on the bank's financial position as of March 31, 2020) revealed non-reporting of frauds to RBI and sanctioning of loans and advances to directors and firms owned by directors' relatives. After a notice, the bank's reply and oral submissions were considered, and RBI concluded the charge was substantiated.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949 (AACS) because the bank failed to comply with RBI directions on Frauds - Classification and Reporting and Board of Directors - UCBs. The inspection report (as on March 31, 2020) noted instances of non-reporting of frauds to RBI and loans/advances sanctioned to the bank's directors and to firms owned by directors' relatives.
Operating Impact
The bank must bear the financial penalty, but the release does not impose any new operating restriction or supervision measure. The adverse impact is limited to the penalty and the compliance finding, with no stated deadline or customer-facing restriction.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 3.00 L
- Order Date
- 25 Nov 2022
- Effective From
- 25 Nov 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank