Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
27 May 2024
Case Brief
By an order dated May 22, 2024, RBI imposed a monetary penalty of ₹1.00 lakh on The Gandhinagar Urban Co-operative Bank Ltd., Gandhinagar, Gujarat. The action followed a statutory inspection and a show-cause process in which RBI found non-compliance with directions on loans and advances to directors, their relatives, and firms/concerns in which they are interested, including clarification on directors acting through sureties/guarantors. RBI stated that the bank had sanctioned or renewed loans where relatives of directors stood as guarantors, and that the charge was sustained after considering the bank's reply and oral submissions. The penalty was imposed under the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after supervisory inspection found non-compliance with its directions on 'Loans and Advances to directors, relatives and firms/concerns in which they are interested' read with 'Loans and Advances to directors etc. - directors as surety/guarantors – Clarification'. RBI said the charge of sanctioning/renewal of loans wherein relatives of the bank's directors stood as guarantors was sustained. 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 and remain subject to RBI's supervisory framework. The order does not itself invalidate customer transactions, but it signals continued regulatory scrutiny and potential for further action if similar breaches persist.
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
- 22 May 2024
- Effective From
- 22 May 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank