Reserve Bank of India – Press Releases

The Reserve Bank of India (RBI) has imposed, by an order dated September 22, 2022, a financial penalty of ₹0.25 lakh (Rupees Twenty Five Thousand solely) on Shree Botad Mercantile Co-operative Bank Ltd., Botad (Gujarat) (the financial institution) for contravention of instructions issued by RBI on ‘Loans and advances to directors etc- directors as surety/guarantors- Clarification’. 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, considering the failure of the financial institution to stick to the aforesaid instructions issued by RBI.

This motion relies 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 prospects.

Background

The inspection of the financial institution primarily based on its monetary place as on March 31, 2021, revealed, that the financial institution had sanctioned credit score facility to people the place kin of the financial institution’s administrators stood as guarantor, leading to contravention of aforesaid instructions issued by RBI. Based on the identical a discover was issued to the financial institution advising it to point out trigger as to why penalty shouldn’t be imposed for non-compliance with the instructions issued by RBI.

After contemplating the financial institution’s reply to the discover and oral submissions made in the course of the private listening to, the RBI got here to the conclusion that the aforesaid cost of non-compliance with RBI instructions was substantiated and warranted imposition of financial penalty.

(Yogesh Dayal)     
Chief General Manager

Press Release: 2022-2023/944