RBI imposes monetary penalty on The Andaman & Nicobar State Co-operative Bank Ltd

Case Brief

By an order dated September 22, 2022, RBI imposed a monetary penalty of ₹5.00 lakh on The Andaman & Nicobar State Co-operative Bank Ltd. The penalty was levied for contravention/non-compliance with Section 20 read with Section 56 of the Banking Regulation Act, 1949 (AACS), after inspection findings indicated that the bank sanctioned unsecured loans to its directors. RBI said the action was taken under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949, and noted that the penalty was based on regulatory compliance deficiencies and was not intended to pronounce on the validity of any customer transaction.