Reserve Bank of India imposes monetary penalty on Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Vadodara (Gujarat)

Case Brief

RBI imposed a monetary penalty of ₹2.00 lakh on Shree Mahalaxmi Mercantile Co-operative Bank Ltd., Vadodara (Gujarat) for contravention of RBI directions on loans and advances to directors, relatives and firms/concerns in which they are interested, and for non-compliance with specific directions dated December 07, 2017 issued under the Supervisory Action Framework (SAF). The inspection found that the bank had extended credit facilities to a firm in which one director was interested and to firms in which directors’ relatives were interested, and had also breached the reduced single-party exposure limit in certain customer loan accounts. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and then imposed the penalty under the Banking Regulation Act, 1949.