RBI imposes monetary penalty on The Co-operative Bank of Mehsana Ltd., Mehsana, Gujarat

Case Brief

RBI, by an order dated August 22, 2023, imposed a monetary penalty of Rs 3.50 lakh on The Co-operative Bank of Mehsana Ltd., Mehsana, Gujarat under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The penalty followed a statutory inspection of the bank as of March 31, 2022, which found that the bank had sanctioned loans where a relative of one of the directors stood as guarantor and had breached the inter-bank counterparty exposure limit. RBI concluded that the bank had not complied with its directions on loans and advances to directors, relatives and related concerns, as well as placement of deposits with other banks by primary urban co-operative banks.