Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
13 Apr 2011
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5 lakh on The Kushtagi Pattana Sahakara Bank Niyanit, Kushtagi, Dist. Koppal, Karnataka under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS). The penalty was for violation of Section 36(1)(a) of the Act in relation to granting/renewing loans, acceptance of fresh deposits, and allowing withdrawal of deposits beyond Rs 1,000, contrary to directions issued to the bank under Section 35A. RBI considered the bank's reply and personal submissions before concluding that the violations were substantiated and warranted the 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 (AACS) after finding that the bank violated Section 36(1)(a) of the Act. The violations related to granting/renewing loans, accepting fresh deposits, and allowing withdrawal of deposits exceeding Rs 1,000 in breach of directions issued to the bank under Section 35A.
Operating Impact
The bank must bear the Rs 5 lakh penalty and remain compliant with RBI directions governing lending, deposit acceptance, and withdrawal limits. The release does not state any additional restriction beyond the penalty, but the cited Section 35A directions were the underlying compliance framework the bank breached.
Regulatory Basis
- Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 as applicable to Co-operative Societies (AACS)
- Section 36(1)(a) of the Banking Regulation Act, 1949 (AACS)
- Section 35A of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank