Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
4 Nov 2020
Case Brief
The Reserve Bank of India imposed a monetary penalty on The Thiruvaikuntam Co-operative Urban Bank Limited for contravening RBI directions prohibiting loans and advances to directors. The inspection report for the bank's position as on March 31, 2019 found that it had sanctioned such loans to its directors, leading RBI to issue a show-cause notice. After examining the bank's response and hearing its oral submissions, RBI concluded that the non-compliance was established and warranted the penalty, imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after inspection revealed that The Thiruvaikuntam Co-operative Urban Bank Limited had sanctioned loans to its Directors, contrary to RBI directions prohibiting loans and advances to directors. RBI issued a show-cause notice, considered the bank's reply and oral submissions, and concluded that the non-compliance was substantiated under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the ₹5 lakh penalty; the release does not indicate any additional operational restriction or restoration issue. The underlying compliance expectation remains that the bank should not extend loans and advances to its directors, and RBI's finding may affect supervisory scrutiny going forward.
Regulatory Basis
- Section 47 A (1) (c)
- Section 46 (4) (i)
- Section 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Order Date
- 3 Nov 2020
- Effective From
- 3 Nov 2020
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank