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The Patdi Nagarik Sahakari Bank Limited, Patdi, Dist. Surendranagar, Gujarat

Co-operative bankPatdi, Gujarat

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 10.0 L

Monetary penalty · Fresh imposition

S2

Published by RBI

18 Jan 2024

Case Brief

By an order dated December 26, 2023, RBI imposed a monetary penalty of ₹10.00 lakh on The Patdi Nagarik Sahakari Bank Limited, Patdi, Dist. Surendranagar, Gujarat. The penalty was imposed under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 for non-compliance with RBI directions relating to donations to trusts and institutions where directors or their relatives were interested, loans and advances to directors/relatives and concerns where relatives acted as guarantors, placement of deposits with other banks by UCBs, and RBI's directions on interest rates on deposits for co-operative banks. RBI said inspection and related correspondence showed the bank had made prohibited donations, sanctioned related-party loans, breached prudential inter-bank exposure limits, and accepted interest-free deposits other than current account deposits.

Why RBI Acted

Governance oversightCapital & exposure normsFair practices

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 inspection found the bank had made donations to a trust in which a director's relative was interested, sanctioned loans to a director's relative and loans where directors' relatives stood as guarantors, breached prudential inter-bank gross exposure and counterparty exposure limits, and accepted interest-free deposits other than current account deposits. The action was taken for non-compliance with RBI directions on donations to trusts and institutions, loans and advances to directors/relatives, inter-bank placements by UCBs, and deposit interest-rate directions.

Operating Impact

The bank must absorb the monetary penalty and ensure future compliance with RBI's related-party, inter-bank exposure, and deposit-pricing directions. The action does not invalidate customer transactions, but it signals heightened regulatory scrutiny of the bank's governance and treasury practices.

Regulatory Basis

  • section 47A(1)(c)
  • sections 46(4)(i)
  • sections 56 of the Banking Regulation Act, 1949

Action Facts

Primary Impact
Fine: Rs 10.0 L
Order Date
26 Dec 2023
Effective From
26 Dec 2023
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank