Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs. 5.00 lakh on Jammu and Kashmir Bank Ltd. under Section 47A(1)(b) of the Banking Regulation Act, 1949. The penalty was for violating Section 20(1) of the Act: while extending Letter of Credit facilities to a constituent, the bank failed to ensure adequate safeguards for LC commitments even though it knew that one of its directors also sat on the constituent's board. The failure resulted in devolvement of the LC on the bank and fund-based exposure to the constituent. RBI had issued a show-cause notice, considered the bank's written reply and personal hearing, and then concluded that the violation was substantiated and warranted penalty.
Action Snapshot
- Primary Impact
- Fine: Rs 5.00 L
- Entity Type
- Bank
- Action Type