Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
8 Jun 2011
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 1.00 lakh on The Gandhinagar Nagrik Co-operative Bank Ltd., Gandhinagar. RBI said the penalty was imposed under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS) for violations involving interest rebate in loan accounts of directors and non-adherence to Know Your Customer (KYC) norms. After issuing a show-cause notice, considering the bank's written reply and personal submissions, RBI concluded that the violations were substantiated and that penalty was warranted.
Why RBI Acted
RBI imposed a monetary penalty under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS) after finding that the bank had violated norms by allowing interest rebate in loan accounts of directors and by not adhering to Know Your Customer (KYC) requirements. The bank had received a show-cause notice and submitted a written reply, but RBI concluded the contraventions were substantiated and warranted penalty.
Operating Impact
The bank must bear the penalty; the release does not describe any operational restriction or license action. The case serves as a compliance signal on related-party lending practices and KYC adherence.
Regulatory Basis
- Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank