RBI imposes monetary penalty on The Bhuj Mercantile Co-operative Bank Ltd., Ahmedabad (Gujarat)

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹7.00 lakh on The Bhuj Mercantile Co-operative Bank Ltd., Ahmedabad (Gujarat), by order dated December 14, 2022. RBI said the penalty was for contravention of its directions on loans and advances to directors and related parties, and on management of advances for urban co-operative banks. The bank's statutory inspection for the position as on March 31, 2021, found that it had sanctioned 35 loans where relatives of directors stood as surety/guarantor and that it failed to monitor the end use of certain loans. After a show-cause process and hearing, RBI concluded that the non-compliance was substantiated and warranted the penalty.