Recorded RBI impact
Fine: Rs 15.0 L
Monetary penalty · Fresh imposition
Published by RBI
18 May 2017
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 15.00 lakh on The Karad Urban Co-operative Bank Ltd., Mumbai under Section 47A(1) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank breached the individual housing loan limit, the limit on loans for repair of houses, and diverted loans meant for purchase of plot/land. Although the bank responded to a show-cause notice with written and oral submissions, RBI concluded that the violations were substantiated and imposed the penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after concluding that the bank had violated norms on individual housing loan limits, limits on loans for repair of houses, and use of loan proceeds. The bank had received a show-cause notice and submitted written and oral responses, but RBI found the violations substantiated and warranting penalty.
Operating Impact
The bank must absorb the monetary penalty and continue to ensure compliance with housing-loan exposure limits and end-use restrictions on loans. No operational restriction is stated, but the finding underscores supervisory scrutiny of its lending practices.
Regulatory Basis
- Section 47A (1) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 15.0 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank