Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
16 Aug 2016
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹1.00 lakh on The Model Co-operative Urban Bank Ltd., Hyderabad, Telangana. The action was taken under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank violated its directives and guidelines on loans and advances to directors and their relatives. After issuing a show-cause notice and considering the bank’s written reply, RBI concluded that the violations were substantiated and warranted the penalty.
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) after concluding that the bank had violated RBI directives and guidelines relating to loans and advances to directors and their relatives. The bank had received a show-cause notice and submitted a written reply, but RBI found the violations substantiated and warranting penalty.
Operating Impact
The bank must absorb the penalty and ensure future compliance with RBI’s rules on lending to directors and related parties. The action does not indicate any direct restriction on operations, but it underscores governance and lending-compliance expectations for the bank.
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