Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
13 Jan 2021
Case Brief
RBI, by an order dated January 13, 2021, imposed a monetary penalty of ₹1 lakh on The Mandvi Mercantile Co-operative Bank Ltd., Mandvi, Dist. Kutch (Gujarat). The penalty was for contravention of RBI directions on loans and advances to directors, relatives and firms/concerns in which they are interested, and on placement of deposits with other banks by primary (urban) co-operative banks. RBI said the breach was revealed during inspection based on the bank’s financial position as on March 31, 2018, and that the bank’s reply and oral submissions were considered before concluding that the non-compliance was substantiated and warranted penalty.
Why RBI Acted
RBI imposed a monetary penalty after an inspection found that the bank had contravened directions relating to loans and advances to directors, their relatives and firms/concerns in which they are interested, and directions on placement of deposits with other banks by primary (urban) co-operative banks. RBI stated that the bank’s failure to adhere to these directions was substantiated after consideration of its reply and oral submissions.
Operating Impact
The bank must absorb the monetary penalty; the release does not mention any additional restrictions on operations, deposits, or lending. The action signals a compliance breach and may affect supervisory scrutiny, but it does not itself impose a forward-looking business curtailment on depositors or customers.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 13 Jan 2021
- Effective From
- 13 Jan 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank