Recorded RBI impact
Fine: Rs 5.00 L
Monetary penalty · Fresh imposition
Published by RBI
30 Nov 2012
Case Brief
The Reserve Bank of India penalised The Town Co-operative Bank Ltd., Hoskote, Karnataka, by imposing a monetary penalty of Rs 5 lakh under Sections 47A(1)(b) and 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank had acquired and used a non-banking asset in violation of Sections 6 and 9 of the Act, breached directives on loans and advances to directors and related persons/entities, and declared and paid dividend contrary to RBI instructions. The bank had received a show-cause notice, submitted a written reply, and made a personal submission, but RBI concluded that the violations were substantiated and warranted penalty.
Why RBI Acted
The Reserve Bank of India imposed a monetary penalty under Section 47A(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 acquired and used a non-banking asset in violation of Sections 6 and 9 of the Act, violated RBI directives on loans and advances to directors, their relatives, and firms/concerns in which directors were interested, and declared and paid dividend in breach of RBI instructions.
Operating Impact
The bank must absorb the monetary penalty and the finding of regulatory breach remains on record. No explicit operational restriction is stated, but the action highlights continued compliance obligations around asset usage, director-related lending, and dividend declarations.
Regulatory Basis
- Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
- Sections 6 and 9 of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies)
Action Facts
- Primary Impact
- Fine: Rs 5.00 L
- Order Date
- 29 Apr 2003
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank