Recorded RBI impact
Fine: Rs 2.50 L
Monetary penalty · Fresh imposition
Published by RBI
14 Nov 2024
Case Brief
By an order dated November 12, 2024, RBI imposed a monetary penalty of ₹2.50 lakh on The Nawanagar Co-operative Bank Ltd., Jamnagar, Gujarat. The penalty was for non-compliance with RBI directions relating to loans and advances to directors, relatives and firms/concerns in which they are interested, and financial statements presentation and disclosures. RBI said the bank sanctioned and renewed a loan to a firm where a director’s relative was a guarantor, and failed to disclose the penalty in the Notes to Accounts of its FY2022-23 annual report. The action was taken under the Banking Regulation Act, 1949, after inspection, a show-cause notice, and consideration of the bank’s reply and oral submissions.
Why RBI Acted
RBI imposed a monetary penalty after its statutory inspection found the bank had sanctioned and renewed a loan to a firm in which a director’s relative stood as guarantor, and had failed to disclose the RBI penalty in the Notes to Accounts of its FY2022-23 annual report. The penalty was imposed under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following a show-cause notice and hearing.
Operating Impact
The bank must absorb the monetary penalty and may face further regulatory action; the release does not state any operational restriction on its banking business. The non-compliance findings may also affect supervisory scrutiny going forward.
Regulatory Basis
- section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 2.50 L
- Order Date
- 12 Nov 2024
- Effective From
- 12 Nov 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank