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The Reserve Bank of India (RBI) has imposed, by an order dated October 13, 2022, a financial penalty of ₹50,000/- (Rupees Fifty Thousand solely) on The Gandhidham Mercantile Co-operative Bank Ltd., Gandhidham, Dist. Kutch (Gujarat) (the financial institution) for contravention of instructions issued by RBI on ‘Loans and advances to directors, relatives and firms / concerns in which they are interested’ and ‘Loans and advances to directors etc- directors as surety/guarantors- Clarification’. This penalty has been imposed in train of powers vested in 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 clients. Background The statutory inspection of the financial institution performed by RBI just about its monetary place as on March 31, 2021, the Inspection Report and Risk Assessment Report pertaining thereto and examination of all associated correspondence revealed, inter alia, that the financial institution had sanctioned a mortgage, whereby relative of its director had curiosity and a mortgage, whereby director’s relative stood as surety / 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 expenses had been substantiated and warranted imposition of financial penalty. (Yogesh Dayal) Press Release: 2022-2023/1053 |
