Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
15 Jul 2011
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5 lakh on The Pioneer Urban Co-operative Bank Ltd., Belgaum, Karnataka, under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS). RBI said the bank violated its instructions by sanctioning a loan to a company in which a director of the bank was interested and by suppressing that information in the relevant quarterly statement proformas I & II submitted to RBI. After a show-cause notice, the bank's written reply, and personal submissions, RBI concluded that the violations were substantiated and deserved the penalty.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS). The violations found were: sanctioning a loan to a company in which a director of the bank had an interest, and suppressing that information by failing to report it in the relevant quarterly statement proformas I & II submitted to RBI. RBI issued a show-cause notice, considered the bank's written reply and personal submissions, and concluded that the contraventions were substantiated and warranted penalty.
Operating Impact
The bank must bear the monetary penalty and the finding records RBI's view of non-compliance. There is no stated restriction on ongoing operations, but the action signals scrutiny over connected lending, governance, and regulatory reporting practices.
Regulatory Basis
- Section 47A(1)(b) read with Section 46(4) 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