Recorded RBI impact
Fine: Rs 10.0 L
Monetary penalty · Fresh imposition
Published by RBI
29 Aug 2022
Case Brief
The Reserve Bank of India imposed an aggregate monetary penalty of ₹10.00 lakh on The Nellore Co-operative Urban Bank Limited, Gandhi Nagar, Nellore District, Andhra Pradesh. RBI said the penalty was for non-adherence to directions on prohibition of loans and advances to directors and their relatives and firms/concerns in which they are interested, as well as exposure norms and statutory/other restrictions applicable to UCBs. The action was taken under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949 (AACS), after inspection findings for the bank’s position as on March 31, 2020, and after considering the bank’s reply and oral submissions.
Why RBI Acted
RBI imposed an aggregate monetary penalty after inspection revealed violations/non-compliance with directions issued under (i) prohibition of loans and advances to directors and their relatives and firms/concerns in which they are interested for UCBs and (ii) exposure norms and statutory/other restrictions for UCBs. The penalty was levied under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949 (AACS), after RBI found the bank’s reply and oral submissions did not negate the charges.
Operating Impact
The bank must absorb the monetary penalty but the release does not indicate any further operational restriction, suspension, or licence action. The finding underscores continued compliance obligations on lending to directors/related parties and adherence to exposure limits for the bank going forward.
Regulatory Basis
- Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 10.0 L
- Order Date
- 25 Aug 2022
- Effective From
- 25 Aug 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank