RBI imposes monetary penalty on The Mandal Nagarik Sahakari Bank Ltd., Mandal, Dist. Ahmedabad, Gujarat- (Reserve Bank of India) (30 Nov 2023)

MANU/RPRL/0736/2023

Banking

The Reserve Bank of India (RBI) has, by an order dated November 03, 2023, imposed a monetary penalty of ₹ 1.50 Lakh (Rupees One lakh fifty thousand only) on The Mandal Nagarik Sahakari Bank Ltd., Mandal, Dist. Ahmedabad, Gujarat (the bank) for non-compliance with the directions issued by RBI on 'Loans and advances to directors, relatives and firms/concerns in which they are interested' read with 'Loans and Advances to Directors etc. - Directors as surety/guarantors - Clarification' and 'Co-operative Banks - Interest Rate on Deposits'. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47-A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

Background

The statutory inspection of the bank conducted by RBI with reference to its financial position as on March 31, 2022, and examination of the Inspection Report, Risk Assessment Report and all correspondence related thereto, revealed, inter alia, that the bank had (i) sanctioned loans where a relative of one of the director of the bank stood as guarantor; and (ii) not paid interest at the applicable rate a) on term deposits which matured on a Sunday / holiday / non-business working day, and were paid on the succeeding working days, b) on deposits withdrawn before their maturity for the period deposits remained with the bank and c) on matured overdue term deposits from the date of maturity till the date of their repayment. Consequently, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said directions, as stated therein.

After considering the bank's reply to the notice and oral submissions made by it during the personal hearing, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank.

Tags : PENALTY IMPOSITION NON-COMPLIANCE