RBI imposes monetary penalty on The Janata Co-operative Bank Ltd., Godhra, Dist. Panchmahal, Gujarat

Case Brief

RBI imposed a monetary penalty of ₹3.50 lakh on The Janata Co-operative Bank Ltd., Godhra, Dist. Panchmahal, Gujarat, by order dated August 31, 2023. The penalty was imposed for non-compliance with RBI directions relating to donations to trusts/institutions where directors or their relatives have an interest, and loans and advances to directors, relatives, and firms/concerns in which they are interested, read with the clarification on directors acting as sureties/guarantors. A statutory inspection revealed that the bank had made a donation to a trust where one of its directors was a trustee and had sanctioned loans in which relatives of directors stood as guarantors. RBI issued a show-cause notice, considered the bank's reply and oral submissions, and concluded that the violations were substantiated under the Banking Regulation Act, 1949.