Recorded RBI impact
Fine: Rs 2,500
Monetary penalty · Fresh imposition
Published by RBI
26 Sept 2022
Case Brief
RBI, by order dated September 22, 2022, imposed a monetary penalty on The Talod Nagarik Sahakari Bank Ltd., Sabarkantha (Gujarat) for contravention of RBI directions on 'Loans and advances to directors etc- directors as surety/guarantors- Clarification'. The inspection of the bank, based on its financial position as on March 31, 2021, found that it had sanctioned credit facilities to individuals where relatives of the bank’s directors stood as guarantors, which RBI treated as non-compliance. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after consideration of the bank’s reply and oral submissions.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 after inspection for the financial position as on March 31, 2021 found that the bank had sanctioned credit facilities to individuals where relatives of the bank’s directors acted as guarantors. RBI held this to be non-compliance with its directions on 'Loans and advances to directors etc- directors as surety/guarantors- Clarification'.
Operating Impact
The bank must bear the monetary penalty and remain compliant with RBI’s directions on loans and advances involving directors and related parties. The action does not invalidate customer transactions, but it reinforces governance and lending-compliance obligations for the bank.
Regulatory Basis
- Section 47 A (1) (c)
- Sections 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 2,500
- Order Date
- 22 Sept 2022
- Effective From
- 22 Sept 2022
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank