Cosmos Co-operative Bank Ltd., Pune, Maharashtra – Penalised

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 5.00 lakh on Cosmos Co-operative Bank Ltd., Pune, Maharashtra, under Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI found that the bank sanctioned loans to directors, their relatives, and firms connected to them, contrary to its instructions. The bank also failed to disclose the correct outstanding loan amounts in the notes on account to its balance sheets for successive annual reports from 2004 to 2009, and submitted incorrect quarterly control returns. RBI noted that 43 loans sanctioned in violation of directives were not reflected in OSS data. After a show-cause notice and review of the bank's written reply, RBI concluded the violations were substantiated and warranted penalty.