Reserve Bank of India – Press Releases

The Reserve Bank of India (RBI) has imposed, by an order dated November 09, 2022, a financial penalty of ₹25,000/- (Rupees Twenty-Five Thousand solely) on The Nawanagar Co-operative Bank Ltd., Jamnagar (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, bearing in mind 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 meant 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 carried out by RBI as regards to 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 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 throughout 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: 2022-2023/1202