Recorded RBI impact
Fine: Rs 25,000
Monetary penalty · Fresh imposition
Published by RBI
14 Nov 2022
Case Brief
RBI imposed a monetary penalty of ₹25,000 on The Nawanagar Co-operative Bank Ltd., Jamnagar (Gujarat), by order dated November 09, 2022. The penalty was levied under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after RBI’s inspection found that the bank had sanctioned a loan where a relative of its director stood as surety/guarantor, violating RBI directions on loans and advances to directors and related surety/guarantor clarifications. RBI stated that the action was based on deficiencies in regulatory compliance and was not meant to pronounce on the validity of any transaction.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 after its inspection found that the bank had sanctioned a loan in which a relative of its director acted as surety/guarantor. This was held to contravene RBI’s directions on 'Loans and advances to directors etc.- directors as surety/guarantors-Clarification'.
Operating Impact
The bank must absorb the monetary penalty and ensure future lending complies with RBI’s restrictions on loans to directors and related sureties/guarantors. The order does not state any additional operational restriction on depositors, borrowers, or other counterparties beyond compliance expectations.
Regulatory Basis
- Section 47 A (1) (c)
- Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 25,000
- Order Date
- 9 Nov 2022
- Effective From
- 9 Nov 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank