The Reserve Bank of India (RBI) has, by an Order dated September 21, 2022, imposed a financial penalty of ₹0.25 lakh (Rupees Twenty Five thousand solely) on Shree Parswanath Co-operative Bank Ltd., Rajkot (Gujarat) (the financial institution) for contravention of instructions issued by RBI on ‘Loans and advances to directors etc- directors as surety/guarantors- Clarification-UCBs’. This penalty has been imposed in train of powers vested within the RBI below the provisions of Section 47 A (1) (c) learn with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949, making an allowance for the failure of the financial institution to stick to the aforesaid instructions issued by RBI.
This motion is predicated on deficiencies in regulatory compliance and isn’t supposed to pronounce upon the validity of any transaction or settlement entered into by the financial institution with its clients.
The statutory inspection of the financial institution carried out by RBI with regards to the financial institution’s monetary place as on March 31, 2021, and examination of the Risk Assessment Report and all associated correspondence pertaining to the identical revealed, inter alia, that the financial institution had sanctioned one credit score facility to a person whereby two family members of one of its administrators stood because the surety / guarantor, leading to contravention of aforesaid instructions issued by RBI. In furtherance to the identical, a discover was issued to the financial institution advising it to indicate trigger as to why penalty shouldn’t be imposed for contravention of the aforesaid instructions issued by RBI.
After contemplating the financial institution’s reply to the discover, the RBI got here to the conclusion that the aforesaid cost was substantiated and warranted imposition of financial penalty.
Press Release: 2022-2023/943