Recorded RBI impact
Fine: Rs 25,000
Monetary penalty · Fresh imposition
Published by RBI
8 Jan 2024
Case Brief
By an order dated December 19, 2023, RBI imposed a monetary penalty of Rs 25,000 on The Subramanianagar Co-operative Urban Bank Ltd., Salem, Tamil Nadu. The action was taken for non-compliance with RBI's directions on 'Board of Directors - UCBs' and on 'Loans and advances to directors, their relatives, and firms/concerns in which they are interested'. RBI's inspection found that the bank had extended loans to a relative of a director, and after issuing a show-cause notice and considering the bank's reply and oral submissions, RBI concluded that the charge was substantiated and warranted penalty under the Banking Regulation Act, 1949 (AACS).
Why RBI Acted
RBI imposed a monetary penalty after its statutory inspection found that The Subramanianagar Co-operative Urban Bank Ltd. had extended loans to a relative of a director, in contravention of RBI directions on 'Board of Directors - UCBs' read with 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 (AACS), after considering the bank's reply and oral submissions and concluding that non-compliance was substantiated.
Operating Impact
The bank must absorb the penalty and ensure future compliance with RBI's governance and connected-lending directions. The release does not indicate any restriction on operations beyond the monetary penalty, but it signals heightened regulatory scrutiny of director-linked lending practices.
Regulatory Basis
- Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 25,000
- Order Date
- 19 Dec 2023
- Effective From
- 19 Dec 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank