The Reserve Bank of India has imposed a monetary penalty of Rs 4.00 lakh (on The Co-operative Bank of Rajkot (Gujarat). Raj Bank, as it is called is guilty of contravention of directions issued by RBI on ‘Loans and advances to directors, relatives and firms in which they are interested.
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, clarifies RBI.
The statutory inspection of the bank conducted by the RBI with reference to the bank’s financial position as on March 31, 2019, the Inspection Report pertaining thereto and examination of all related correspondence revealed, inter alia, that the bank had sanctioned loans to the firms in which a relative of bank’s director was interested, resulting in non-compliance with aforesaid directions issued by RBI.
In furtherance to the same, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the aforesaid directions issued by the RBI.
After considering the bank’s reply to the notice and oral submissions made during the personal hearing, the RBI concluded that the aforesaid charge was substantiated and warranted imposition of monetary penalty.