Recorded RBI impact
Fine: Rs 75,000
Monetary penalty · Fresh imposition
Published by RBI
12 Dec 2024
Case Brief
RBI, by order dated December 6, 2024, imposed a monetary penalty on The Udumalpet Co-operative Urban Bank Ltd., Tamil Nadu, after a statutory inspection found non-compliance with RBI directions concerning loans and advances to directors/relatives and exposure norms/statutory restrictions for urban co-operative banks. RBI said the bank had sanctioned a loan to a director’s relative and had also sanctioned loans to nominal members beyond the prescribed regulatory limit. The penalty was levied under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after a statutory inspection found the bank had failed to comply with directions on 'Loans and advances to directors, their relatives, and firms/concerns in which they are interested' and 'Exposure Norms and Statutory / Other Restrictions – UCBs'. The sustained charges included sanctioning a loan to the relative of a bank director and sanctioning loans to nominal members beyond the prescribed regulatory limit. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the monetary penalty and remain subject to RBI supervisory oversight. The release does not state any operational curbs beyond the fine, but it signals that RBI may initiate further action if warranted.
Regulatory Basis
- Section 47A(1)(c)
- Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 75,000
- Order Date
- 6 Dec 2024
- Effective From
- 6 Dec 2024
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank