Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
28 Nov 2024
Case Brief
RBI, by an order dated November 25, 2024, imposed a penalty of Rs 50,000 on The Raichur District Central Co-operative Bank Ltd., Karnataka. The action followed a NABARD statutory inspection and a subsequent show-cause process, after which RBI found that the bank had sanctioned loans to its directors, attracting contravention of Section 20 read with Section 56 of the Banking Regulation Act, 1949. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
Why RBI Acted
Following a statutory inspection by NABARD with reference to the bank's financial position as on March 31, 2023, RBI issued a show-cause notice based on supervisory findings of contravention of statutory provisions. After considering the bank's reply and oral submissions, RBI held that the charge sustained was that the bank had sanctioned loans to its directors, in contravention of Section 20 read with Section 56 of the Banking Regulation Act, 1949. RBI imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Act.
Operating Impact
The bank must absorb the penalty and address the compliance lapse identified by RBI. The order does not describe an operational restriction, but it signals continued supervisory scrutiny and potential for further action if similar contraventions recur.
Regulatory Basis
- Section 20 read with Section 56 of the Banking Regulation Act, 1949
- Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Order Date
- 25 Nov 2024
- Effective From
- 25 Nov 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank