Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
31 Oct 2022
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹5.00 lakh on The Mysore Merchants Co-operative Bank Ltd., Mysore, Karnataka, for non-adherence to directions issued under Management of Advances-UCBs. RBI said inspection findings showed instances of sanction of gold loans in breach of the cap under the bullet repayment scheme. After issuing a show-cause notice and considering the bank’s reply and oral submissions, RBI concluded that the charge of non-compliance was substantiated and warranted penalty under the Banking Regulation Act, 1949 (AACS).
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949 (AACS), after inspection found instances of sanction of gold loans in breach of the cap under the bullet repayment scheme. The bank was found to have failed to adhere to RBI directions issued under Management of Advances-UCBs, and its reply/oral submissions did not change RBI’s conclusion that the non-compliance was substantiated.
Operating Impact
The bank must absorb the monetary penalty and continue operations subject to existing RBI norms. The order does not invalidate customer transactions, but it signals heightened compliance expectations around advance-sanctioning limits and similar lending controls.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Order Date
- 20 Oct 2022
- Effective From
- 20 Oct 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank