Reserve Bank of India imposes monetary penalty on The Co-operative Bank of Rajkot Ltd., Rajkot (Gujarat)

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹4.00 lakh on The Co-operative Bank of Rajkot Ltd., Rajkot (Gujarat), by order dated January 11, 2022. The penalty was imposed under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, after RBI found that the bank had sanctioned loans to firms in which a relative of the bank’s director was interested, contrary to RBI’s directions on loans and advances to directors, relatives and firms/concerns in which they are interested. RBI stated that the action was based on deficiencies in regulatory compliance and did not pronounce on the validity of any transaction or agreement.