Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
17 Oct 2024
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹50,000 on The Kottarakara Co-operative Urban Bank Limited, Kerala, by order dated October 07, 2024. RBI said the bank failed to comply with specific directions issued under the Supervisory Action Framework (SAF), including sanctioning/renewing credit facilities to sectors with high NPA/default levels despite those directions. The action was taken under sections 47A(1)(c), 46(4)(i) and 56 of the Banking Regulation Act, 1949, after a statutory inspection and consideration of the bank's reply and oral submissions.
Why RBI Acted
RBI imposed a monetary penalty because, in its statutory inspection and subsequent supervisory review, it found that The Kottarakara Co-operative Urban Bank Limited had not complied with specific directions issued under the Supervisory Action Framework (SAF). The sustained charge was that the bank sanctioned and renewed credit facilities to sectors having a high level of NPA/defaults, in non-adherence to RBI's SAF-related instructions. The penalty was imposed under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the penalty and remain exposed to any further RBI action that may arise from the same supervisory findings. The release does not impose a new operating restriction, but it signals continued scrutiny over the bank's lending to higher-risk sectors and compliance with SAF directions.
Regulatory Basis
- section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Order Date
- 7 Oct 2024
- Effective From
- 7 Oct 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank