RBI imposes penalty on The Bechraji Nagrik Sahakari Bank Ltd., Mehsana (Gujarat)

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 1 lakh on The Bechraji Nagrik Sahakari Bank Ltd., Mehsana (Gujarat). The penalty was imposed under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies) for violating RBI Directive No. 5 dated April 29, 2003 read with Section 20 of the Banking Regulation Act, 1949 (AACS). The specific breach was granting loans to directors and their relatives. RBI noted that it had issued a show-cause notice, considered the bank's written reply and personal submissions, and concluded that the violation was substantiated and warranted penalty.