Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
21 Feb 2011
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5 lakh on The Surat Mercantile Co-operative Bank Ltd., Surat, Dist. Surat under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS). RBI said the bank violated instructions on disposal of non-banking assets, donations, purchasing cheques beyond the ceiling of Rs 0.20 lakh per instrument, and collecting third-party 'Account Payees' cheques. After considering the bank's written reply to the show-cause notice, RBI concluded the contraventions were substantiated and justified the penalty.
Why RBI Acted
RBI imposed a penalty under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS) after finding violations of instructions relating to disposal of non-banking assets, donations, purchasing of cheques beyond the ceiling of Rs 0.20 lakh per instrument, and collecting third-party 'Account Payees' cheques. The bank had replied to a show cause notice, but RBI concluded the violations were substantiated and warranted penalty.
Operating Impact
The bank must absorb the penalty and any compliance remediation that follows from the findings. The order does not impose a business restriction, but it signals RBI-supervisory scrutiny over the bank's asset disposal, donation practices, and cheque-related controls.
Regulatory Basis
- Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (AACS)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank