Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
28 Nov 2024
Case Brief
RBI, by order dated November 25, 2024, imposed a monetary penalty of Rs 1,00,000 on The Kanara District Central Co-operative Bank Ltd., Karnataka. The penalty followed a statutory inspection by NABARD and a show-cause process, and RBI concluded that the bank had contravened Section 20 read with Section 56 of the Banking Regulation Act, 1949 by sanctioning loans to its directors and to companies/concerns in which the directors were interested. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
Why RBI Acted
Following a statutory inspection by NABARD with reference to the bank's financial position as on March 31, 2023, RBI issued a show-cause notice based on supervisory findings of contravention of statutory provisions. After considering the bank's reply and oral submissions, RBI sustained the charge that the bank had sanctioned loans to its directors and to companies/concerns in which the directors were interested, in contravention of Section 20 read with Section 56 of the Banking Regulation Act, 1949. RBI imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
Operating Impact
The bank must absorb the monetary penalty, and the finding serves as a compliance warning on related-party lending and governance controls. No broader operational restriction is described, but RBI notes the penalty is without prejudice to any other action it may initiate.
Regulatory Basis
- Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act)
- Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 25 Nov 2024
- Effective From
- 25 Nov 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank