Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
15 Feb 2016
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹2.00 lakh on The Kapadwanj Peoples Co-operative Bank Ltd., Kapadwanj, Dist Kheda (Gujarat), under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank violated operational instructions issued under Section 36(1) of the BR Act, 1949 (AACS), including guidelines on extending loans and advances to directors/their relatives/concerns in which they are interested, KYC/AML norms, and implementation of Core Banking Solution. After issuing a show-cause notice, considering the bank’s written reply and personal submission, RBI concluded the violations were substantiated and warranted 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 (as applicable to co-operative societies) after finding that the bank had violated operational instructions issued under Section 36(1) of the BR Act, 1949 (AACS). The violations related to lending to directors/their relatives/concerns in which they were interested, non-compliance with Know Your Customer (KYC)/Anti Money Laundering (AML) norms, and implementation of Core Banking Solution. RBI issued a show-cause notice, considered the bank's reply and personal submission, and concluded the violations were substantiated.
Operating Impact
The bank must absorb the ₹2 lakh penalty; the release does not describe any new operating restriction, suspension, or cancellation. The action serves as a regulatory reprimand for the bank and signals continued scrutiny of its lending controls, AML/KYC compliance, and core banking implementation.
Regulatory Basis
- Section 47A (1)(b) read with Section 46(4) of the Banking Regulation Act, 1949
- Section 36(1) of B.R. Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank