Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
30 Jan 2025
Case Brief
By an order dated January 28, 2025, RBI imposed a monetary penalty of Rs 2.00 lakh on The Vadali Nagarik Sahakari Bank Ltd., Dist. Sabarkantha, Gujarat. The penalty followed a statutory inspection with reference to the bank's financial position as on March 31, 2023, and related supervisory findings showing non-compliance with RBI directions on loans and advances to directors/relatives, placement of deposits with other banks by primary (urban) co-operative banks, and KYC. RBI cited specific breaches including a loan sanctioned where a director's relative was a guarantor, non-adherence to prudential inter-bank and counterparty exposure limits, and failure to periodically review risk categorisation of certain accounts. The penalty was imposed 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 supervisory inspection found the bank had (i) sanctioned a loan where a relative of its director stood as guarantor, (ii) failed to adhere to prudential inter-bank (gross) and counterparty exposure limits, and (iii) failed to carry out periodic review of risk categorisation of certain accounts at least once in six months. The action was taken 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.
Operating Impact
The bank must absorb the monetary penalty and address the compliance gaps identified by RBI. The order does not itself impose a business restriction, but the findings may lead to further supervisory or enforcement action if deficiencies persist.
Regulatory Basis
- section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Order Date
- 28 Jan 2025
- Effective From
- 28 Jan 2025
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank