Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
22 Aug 2013
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5.00 lakh on The Nagrik Sahakari Bank Ltd., Indore (Madhya Pradesh). The penalty was levied under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies), following a show-cause notice and consideration of the bank's written reply. RBI said the bank violated an RBI directive and Section 36(1) of the Act in connection with loans and advances to directors, their relatives, and firms/concerns in which they were interested, as well as operational instructions issued by RBI.
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 issuing a show-cause notice and examining the bank's written reply. The bank was found to have violated an RBI directive and Section 36(1) of the Banking Regulation Act, 1949 (AACS) in relation to loans and advances to directors, their relatives, and firms/concerns in which they were interested, as well as operational instructions issued by RBI.
Operating Impact
The bank must absorb the penalty and remain compliant with RBI directives and statutory lending restrictions going forward. No broader business restriction was imposed, but the violation highlights ongoing obligations around related-party lending and adherence to RBI operational instructions.
Regulatory Basis
- Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
- section 36(1) of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank