Recorded RBI impact
Fine: Rs 10.0 L
Monetary penalty · Fresh imposition
Published by RBI
20 Mar 2019
Case Brief
The Reserve Bank of India penalised The Mahila Vikas Co-operative Bank Ltd., Ahmedabad (Gujarat) (Non-scheduled UCB) by imposing a monetary penalty of Rs 10.00 lakh under Section 47A(1) read with Section 46(4) of the Banking Regulation Act, 1949, as applicable to co-operative societies. RBI said the bank violated instructions/guidelines relating to the ceiling on unsecured advances, loans and advances to directors, relatives and firms/concerns in which they are interested, and KYC/AML guidelines. After a show cause notice, the bank submitted a written reply and personal submissions, but RBI concluded the violations were substantiated and warranted penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) after concluding that the bank had violated RBI instructions and guidelines relating to the ceiling on unsecured advances, loans and advances to directors, relatives and firms/concerns in which they are interested, as well as KYC/AML requirements. The bank responded to the show cause notice and made personal submissions, but RBI found the contraventions substantiated and fit for penalty.
Operating Impact
The bank must absorb the financial penalty and treat the cited compliance lapses as established by RBI. There is no restriction on operations in this release, but the action underscores the need for tighter controls on lending exposures and KYC/AML compliance going forward.
Regulatory Basis
- Section 47A (1) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 10.0 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank