RBI imposes monetary penalty on The Sarvodaya Sahakari Bank Limited, Modasa, Gujarat

Case Brief

RBI, by order dated August 31, 2023, imposed a monetary penalty of Rs 6 lakh on The Sarvodaya Sahakari Bank Limited, Modasa, Gujarat. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, for non-compliance with RBI directions relating to loans and advances to directors/relatives and related concerns, placement of deposits with other banks, and interest rate on deposits. RBI's inspection found sanction of credit facilities to a director's relative and guarantor-related breaches, breaches of inter-bank exposure limits, and non-payment of interest on matured fixed deposits for the required period/rate. RBI clarified that the penalty was based on regulatory compliance deficiencies and not intended to pronounce on the validity of any customer transaction.