Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
5 Oct 2021
Case Brief
The Reserve Bank of India imposed a monetary penalty on The Pragati Co-operative Bank Ltd., Thara (Gujarat) after finding non-compliance with RBI directions governing loans and advances to directors, their relatives, and firms/concerns in which they are interested, as well as loans where directors act as sureties/guarantors. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, following a statutory inspection, 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 and examination of related correspondence found that the bank had failed to adhere to directions on 'Loans and advances to directors, relatives and firms / concerns in which they are interested' and 'Loans and advances to directors etc. – directors as surety/guarantors – Clarification'. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and concluded that the contravention was substantiated under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must bear the ₹1 lakh penalty, but the release does not announce any restriction on its business activities or customer operations. The finding is limited to regulatory non-compliance and does not invalidate individual transactions or agreements.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 4 Oct 2021
- Effective From
- 4 Oct 2021
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank