Recorded RBI impact
Fine: Rs 50,000
Monetary penalty · Fresh imposition
Published by RBI
8 Jan 2024
Case Brief
By order dated December 19, 2023, RBI imposed a monetary penalty on The Stambhadri Co-operative Urban Bank Ltd., Khammam, Telangana. The bank was found non-compliant with RBI directions on 'Board of Directors - UCBs' and on 'Loans and advances to directors, their relatives, and firms/concerns in which they are interested', after RBI's statutory inspection revealed that the bank had extended loans to a director and directors’ relatives. RBI concluded that the charge was substantiated and imposed the penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI found, based on statutory inspection and related examination, that the bank had extended loans to a director and directors’ relatives, contrary to the directions issued on 'Board of Directors - UCBs' read with the directions on 'Loans and advances to directors, their relatives, and firms/concerns in which they are interested'. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after considering the bank's reply and oral submissions.
Operating Impact
The bank must absorb the penalty and address the compliance lapses identified by RBI, particularly around governance controls and related-party lending. The release does not state any direct operational restriction on customers, but it signals heightened regulatory scrutiny of the bank's lending and board-related compliance.
Regulatory Basis
- Section 47A(1)(c)
- Sections 46(4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 50,000
- Order Date
- 19 Dec 2023
- Effective From
- 19 Dec 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank