Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
3 Nov 2015
Case Brief
The Reserve Bank of India imposed a monetary penalty on The Madanapalle Co-operative Town Bank Ltd., Madanapalle, Chittoor District, Andhra Pradesh, under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The penalty was for violation of Section 20 and Section 20A of the Act and RBI directives/guidelines on loans and advances to directors and their relatives. RBI issued a show-cause notice, considered the bank's written reply, and concluded that the violations were substantiated.
Why RBI Acted
RBI imposed a monetary penalty after concluding that the bank had violated Section 20 and Section 20A of the Banking Regulation Act, 1949 (as applicable to co-operative societies) and the Reserve Bank's directives/guidelines on loans and advances to directors and their relatives. The bank had submitted a written reply to a show-cause notice, but RBI found the violations substantiated and warranted penalty.
Operating Impact
The bank must absorb the ₹1 lakh penalty; the release does not describe any operational ban or licence action. The underlying compliance issue concerns lending to directors and relatives, so the bank remains exposed to supervisory scrutiny on related-party lending and governance controls.
Regulatory Basis
- Section 47A (1) (b) read with Section 46 (4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
- Section 20
- Section 20 A 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