Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
18 Jan 2024
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹2.00 lakh on The Idar Nagarik Sahakari Bank Limited, Idar, Dist. Sabarkantha, Gujarat. The penalty was imposed under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 for non-compliance with RBI’s directions on placement of deposits with other banks by primary (urban) co-operative banks. RBI’s inspection, based on the bank’s financial position as on March 31, 2022, found that the bank had breached the prudential inter-bank counterparty exposure limit. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and concluded that the violation was substantiated, warranting the penalty.
Why RBI Acted
RBI imposed a monetary penalty under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The penalty was for non-compliance with RBI directions on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’. In its inspection with reference to the bank’s financial position as on March 31, 2022, RBI found that the bank had breached the prudential inter-bank counterparty exposure limit. After considering the bank’s reply and oral submissions, RBI held the charge substantiated and imposed the penalty.
Operating Impact
The bank must absorb the financial penalty of ₹2 lakh; the release does not describe any new restriction on operations, deposits, or lending. The action is a compliance enforcement measure and does not by itself state any additional forward-looking operational curbs on customers or counterparties.
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 2.00 L
- Order Date
- 22 Dec 2023
- Effective From
- 22 Dec 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank