RBI imposes Monetary Penalty on The Mehsana District Central Cooperative Bank Ltd., Mehsana (Gujarat)

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹5.00 lakh on The Mehsana District Central Cooperative Bank Ltd., Mehsana (Gujarat) under Section 47A(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (as applicable to co-operative societies). RBI said the bank violated Section 22(3)(b) of the B.R. Act, 1949 (AACS), which requires that a co-operative bank's affairs not be conducted in a manner detrimental to the interests of present or future depositors, and also breached RBI directives/guidelines on prudential accounting norms for provisioning against Non Performing Investments. The penalty followed an NABARD inspection as on 31.03.2014, a show-cause notice, and consideration of the bank’s written reply and personal submissions.