Reserve Bank of India penalizes The Nasik Merchants’ Co-operative Bank Ltd., Nasik, Maharashtra

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 5.00 lakh on The Nasik Merchants’ Co-operative Bank Ltd., Nasik, Maharashtra, under Section 46(4) read with Section 47A(1)(a) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said inspection of the bank as on March 31, 2012 showed persistent violation of Section 6(1)(j) of the Act because the bank had set up NAMCO Charitable Trust, seven trustees of which were also directors of the bank, for running a medical college-cum-hospital. After a show-cause notice and the bank’s reply, RBI held that the violations were substantiated and classified as 'Major', justifying the penalty.