Recorded RBI impact
Fine: Rs 10.0 L
Monetary penalty · Fresh imposition
Published by RBI
11 Jul 2016
Case Brief
The Reserve Bank of India imposed a monetary penalty on The Prathamik Shikshak Sahakari Bank Ltd., Kolhapur (Salary Earners’ Bank) under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The violation related to operational instructions on declaration and payment of dividend for FY 2013-14 without prior permission from RBI. After a show-cause notice and the bank’s written reply, RBI held that the violations were substantial and merited 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 (as applicable to co-operative societies) because The Prathamik Shikshak Sahakari Bank Ltd., Kolhapur violated operational instructions relating to declaration and payment of dividend for the financial year 2013-14 without obtaining prior permission from RBI. The bank responded to a show-cause notice, but RBI concluded the violations were substantial and warranted penalty.
Operating Impact
The bank must absorb the ₹10 lakh penalty, with no additional operational restriction mentioned in the release. The action is backward-looking and does not state any ongoing ban or cap, but it signals regulatory non-compliance on dividend distribution requiring future adherence to RBI permission requirements.
Regulatory Basis
- Section 47A (1) (b)
- Section 46 (4) of the Banking Regulation Act 1949 (As Applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 10.0 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank