Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
22 Aug 2024
Case Brief
By an order dated August 09, 2024, RBI imposed a monetary penalty of ₹1 lakh on The Gandhidham Mercantile Co-operative Bank Limited, Kachchh, Gujarat. The penalty followed a statutory inspection and subsequent supervisory proceedings that found the bank had donated to a trust where directors or their relatives were interested, violating RBI directions on donations to trusts and institutions with related-party interests. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and then sustained the charge under the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after a statutory inspection found non-compliance with its directions on ‘Donations to Trusts and Institutions where Directors, their relatives hold position or are interested’. After notice, reply, personal hearing, and additional submissions, RBI sustained the charge that the bank donated to a trust in which directors/relatives of directors were interested. The penalty was imposed under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the penalty, while the finding remains a supervisory compliance matter and does not by itself invalidate any transaction or agreement. The order may also leave the bank exposed to further RBI action based on the same underlying conduct.
Regulatory Basis
- section 47A (1) (c) read with sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 9 Aug 2024
- Effective From
- 9 Aug 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank