Recorded RBI impact
Fine: Rs 25,000
Monetary penalty · Fresh imposition
Published by RBI
17 Oct 2022
Case Brief
RBI, by an order dated October 13, 2022, imposed a monetary penalty of Rs 25,000 on The Meghraj Nagarik Sahakari Bank Ltd., Aravalli (Gujarat). The penalty was based on inspection findings that the bank had sanctioned six loans where directors’ relatives stood as surety/guarantors, contrary to RBI directions on loans and advances to directors and related clarifications. RBI concluded the non-compliance was substantiated after considering the bank’s reply and oral submissions, and imposed the penalty under the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after inspection found that the bank had sanctioned six loans in which directors’ relatives acted as surety/guarantors. This was held to be a contravention of RBI’s directions on 'Loans and advances to directors etc- directors as surety/guarantors- Clarification' and the penalty was levied 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 penalty and address compliance weaknesses in lending to directors and related persons. The action does not itself impose an operational restriction, but it signals RBI scrutiny over future adherence to the relevant lending directions.
Regulatory Basis
- Section 47 A (1) (c)
- Sections 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 25,000
- Order Date
- 13 Oct 2022
- Effective From
- 13 Oct 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank