Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
24 Aug 2021
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹1.00 lakh on The Lunawada Nagrik Sahakari Bank Ltd., Lunawada, Mahisagar District (Gujarat). The penalty was imposed after RBI inspection and review of related correspondence found non-compliance with its directions on loans and advances to directors, relatives, and firms/concerns in which they are interested. RBI issued a show-cause notice, reviewed the bank's reply and hearing submissions, and concluded that the contravention was established under the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after a statutory inspection found that the bank had not complied with RBI directions relating to loans and advances to directors, relatives, and firms/concerns in which they are interested. The RBI issued a show-cause notice, considered the bank's reply, oral hearing submissions, and additional submissions, and concluded that the charge was substantiated 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 monetary penalty and ensure future compliance with RBI directions on loans to directors and connected parties. The order does not, by itself, invalidate customer transactions but signals heightened compliance scrutiny going forward.
Regulatory Basis
- section 47 A (1) (c) read with sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 23 Aug 2021
- Effective From
- 23 Aug 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank