Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
2 Nov 2012
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 1 lakh 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). RBI said the bank violated operational instructions by declaring and paying dividend without prior permission. After issuing a show-cause notice and considering the bank's written reply, RBI found the violation substantiated and imposed 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). The violation concerned declaration and payment of dividend without obtaining prior permission from RBI. RBI issued a show-cause notice, considered the bank's written reply, and concluded the contravention was substantiated and warranted penalty.
Operating Impact
The bank must absorb the Rs 1 lakh penalty; the release does not describe any additional operational restriction or ongoing remedial direction. The action is primarily financial and does not indicate immediate restrictions on customers or counterparties.
Regulatory Basis
- Section 47A (1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank