Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
9 Dec 2024
Case Brief
RBI, by order dated December 04, 2024, imposed a monetary penalty of ₹1.00 lakh on The Halol Mercantile Co-operative Bank Ltd., Dist. Panchmahal, Gujarat. The penalty followed a statutory inspection and supervisory findings that the bank had violated RBI directions relating to donations to trusts/institutions connected with directors and to loans and advances to directors, their relatives, and related firms/concerns. RBI noted that the bank donated to a trust in which a director was interested and sanctioned a loan where a relative of the director was a guarantor. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after supervisory findings showed the bank did not comply with directions on 'Donations to Trusts and Institutions where Directors, their relatives hold position or are interested' and 'Loans and advances to directors, their relatives, and firms / concerns in which they are interested'. RBI found that the bank donated to a trust in which a director was interested and sanctioned a loan where a relative of the director stood as guarantor. 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 monetary penalty, but the release does not impose any new operational restriction or withdrawal of licence. The action signals compliance deficiencies in related-party governance and lending controls, and RBI may still initiate other action if warranted.
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
- 4 Dec 2024
- Effective From
- 4 Dec 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank