Recorded RBI impact
Fine: Rs 3.00 L
Monetary penalty · Fresh imposition
Published by RBI
22 Dec 2023
Case Brief
RBI, by order dated November 30, 2023, imposed a monetary penalty of Rs 3.00 lakh on The Kutch Mercantile Co-operative Bank Limited, Rapar, Dist. Kachchh, Gujarat. The penalty was for non-compliance with RBI directions relating to placement of deposits with other banks by UCBs, nominal membership, and exposure norms. RBI said inspection findings showed breaches of the prudential inter-bank gross exposure limit and counterparty exposure limit, and loans sanctioned to nominal members above the applicable ceiling. The action was taken under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 after inspection revealed non-compliance with directions on ‘Placement of Deposits with Other Banks by Primary (Urban) Co-operative Banks (UCBs)’, ‘Policy and Practice regarding Nominal Membership’, and related exposure norms/restrictions. The bank had breached the prudential inter-bank gross exposure limit and prudential inter-bank counterparty exposure limit, and had sanctioned loans to nominal members in amounts exceeding the applicable ceiling.
Operating Impact
The bank must absorb the penalty and strengthen compliance with RBI exposure and lending norms. No customer transaction was declared invalid, but the finding signals continued supervisory scrutiny of the bank's inter-bank exposures and lending to nominal members.
Regulatory Basis
- Section 47A(1)(c)
- Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 3.00 L
- Order Date
- 30 Nov 2023
- Effective From
- 30 Nov 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank