Recorded RBI impact
Fine: Rs 48.0 L
Monetary penalty · Fresh imposition
Published by RBI
10 Oct 2022
Case Brief
RBI imposed a monetary penalty of ₹48.00 lakh on The Kerala State Co-operative Bank Ltd., Thiruvananthapuram by order dated October 03, 2022. The penalty was imposed for non-compliance with section 19 read with section 56 of the Banking Regulation Act, 1949 and RBI directions on 'Gold Loan - Bullet Repayment'. The inspection found that the bank had not complied with RBI directions specifying the extent and conditions for co-operative banks to hold shares in another co-operative society, and had also failed to comply with directions limiting the quantum of gold loans under the bullet repayment option. RBI stated that the penalty was based on regulatory deficiencies and did not pronounce on the validity of any transaction or agreement with customers.
Why RBI Acted
The bank was found to have contravened section 19 read with section 56 of the Banking Regulation Act, 1949 by not complying with RBI directions on the extent and conditions under which co-operative banks could hold shares in another co-operative society. It also failed to comply with RBI directions limiting the quantum of gold loans that could be granted under the bullet repayment option. RBI imposed the penalty under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Act.
Operating Impact
The bank must absorb the monetary penalty and remain compliant with the cited Banking Regulation Act provisions and RBI directions going forward. The order does not invalidate customer transactions, but it signals supervisory concern over the bank's governance and lending-compliance practices.
Regulatory Basis
- section 19 read with section 56 of Banking Regulation Act, 1949
- section 47 A (1) (c) read with sections 46 (4) (i) and 56 of the Act
Action Facts
- Primary Impact
- Fine: Rs 48.0 L
- Order Date
- 3 Oct 2022
- Effective From
- 3 Oct 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank