Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
27 Mar 2023
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹2.00 lakh on Vyapari Sahakari Bank Maryadit, Solapur (Maharashtra) for contravention of RBI directions applicable to Urban Co-operative Banks, including Exposure Norms & Statutory/Other Restrictions and Board of Directors-UCBs. An inspection based on the bank's position as on March 31, 2021 found that the bank had given donations beyond the permissible limit and sanctioned director-related loans in violation of RBI directions. After a show-cause notice, replies from the bank, and oral submissions at a personal hearing, RBI held the charges to be substantiated and imposed the penalty under the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after an inspection (based on financial position as on March 31, 2021) found non-compliance with directions issued to Urban Co-operative Banks on Exposure Norms & Statutory/Other Restrictions and Board of Directors-UCBs. The deficiencies specifically included giving donations in excess of the permissible limit and sanctioning director-related loans contrary to RBI directions. RBI issued a show-cause notice, considered the bank's replies and oral submissions, and concluded the charges were substantiated.
Operating Impact
The bank must absorb the monetary penalty and address the compliance deficiencies identified by RBI, particularly around donation limits and director-related lending. The order does not invalidate customer transactions, but it signals heightened regulatory scrutiny over the bank's compliance and governance practices.
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 2.00 L
- Order Date
- 24 Mar 2023
- Effective From
- 24 Mar 2023
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank