Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
3 Mar 2016
Case Brief
The Reserve Bank of India imposed a monetary penalty on The Muslim Co-operative Bank Ltd., Mysuru, Karnataka, after finding that the bank had violated RBI instructions and a directive by granting loans to the relatives of directors. The penalty was imposed under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI issued a show-cause notice, reviewed the bank's written response, and concluded that the violations were substantiated.
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). The bank was found to have violated RBI's circulars dated April 29, 2003 and June 24, 2003, as well as a directive dated April 29, 2003, by granting loans to relatives of directors. RBI had issued a show-cause notice, considered the bank's written reply, and concluded the violations were substantiated and warranted penalty.
Operating Impact
The bank must absorb the ₹1 lakh penalty; the release does not describe any broader operating restriction. The matter highlights RBI scrutiny over related-party lending and governance controls, but no immediate customer-facing restriction is described in the release.
Regulatory Basis
- Section 47 A (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
- Order Date
- 29 Apr 2003
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank