Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
21 Jun 2016
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹1.00 lakh on The Lunawada Peoples’ Co-operative Bank Ltd., Lunawada, Dist. Mahisagar (Gujarat) under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI found that the bank had issued demand drafts to a single party on the same day in cash for amounts just below ₹50,000, which was treated as circumvention of RBI guidelines. After issuing a show-cause notice and considering the bank’s written reply and personal submission, RBI concluded that the violation was substantiated and penalty was warranted.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The violation cited was issuance of Demand Drafts to a single party on the same day in cash for values just below ₹50,000, in circumvention of RBI guidelines. RBI considered the bank’s reply and personal submission but concluded the violation was substantiated and warranted penalty.
Operating Impact
The bank must absorb the monetary penalty; no additional restriction, suspension, or withdrawal of business activity is described in the release. The action has no direct forward-operational ban, but it signals compliance scrutiny for cash-based demand draft issuance practices.
Regulatory Basis
- Section 47A (1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank