Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
28 Jun 2012
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 5.00 lakh on The Surat People's Co-operative Bank Ltd., Dist. Surat under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949. The penalty was for violating RBI directives/instructions on establishment or promotion of trusts, loans and advances to firms/companies in which the bank's directors and their relatives had interests, and KYC norms. RBI said it had issued a show-cause notice, reviewed the bank's reply, and found the violations substantiated.
Why RBI Acted
RBI imposed a monetary penalty under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). The bank was found to have violated RBI directives/instructions regarding (i) establishment/promotion of trusts, (ii) loans and advances to firms/companies in which the bank's directors and their relatives were interested, and (iii) KYC norms. RBI issued a show-cause notice, considered the bank's written reply, and concluded that the violations were substantiated and warranted penalty.
Operating Impact
The bank must bear the financial penalty; the release does not describe any operational restriction beyond the fine. The action signals compliance shortcomings in governance, related-party lending controls, and KYC processes, but no additional forward-looking business restriction is stated.
Regulatory Basis
- Section 47(A)(1)(b)
- Section 46(4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank