Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
15 Jul 2011
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5.00 lakh on The Jagruti Co-operative Bank Ltd., Belgaum, Karnataka, under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS). RBI found that the bank violated its instructions by sanctioning loans to present directors, their relatives, and firms/concerns in which they were interested, and by suppressing this information in the relevant quarterly statement proforma I & II submitted to RBI. After a show-cause process and consideration of the bank's reply and personal submissions, RBI concluded that the violations were substantiated and warranted the penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS). The bank was found to have violated RBI instructions by sanctioning loans to present directors, their relatives, and firms/concerns in which they were interested, and by suppressing this by not reporting it in the relevant quarterly statement proforma I & II submitted to RBI. RBI issued a show-cause notice, considered the bank's written reply and personal submissions, and concluded that the violations were substantiated.
Operating Impact
The bank must bear the Rs 5 lakh penalty; the release does not describe any further restriction on operations. The finding highlights reporting and governance compliance obligations around related-party lending and disclosure to RBI.
Regulatory Basis
- Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank