RBI imposes monetary penalty on The Sevalia Urban Co-operative Bank Ltd., Sevalia, dist. Kheda, Gujarat

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹50,000 on The Sevalia Urban Co-operative Bank Ltd., Sevalia, dist. Kheda, Gujarat, by an order dated September 18, 2023. RBI said the bank failed to comply with directions on loans and advances to directors, relatives, and firms/concerns in which they are interested, read with the clarification on directors acting as surety/guarantors. The violation arose from a statutory inspection for the bank’s financial position as on March 31, 2022, which found that the bank had sanctioned a loan in which a relative of one of its directors stood as surety/guarantor. RBI issued a show-cause notice, considered the bank’s reply and oral submissions, and concluded that the non-compliance was substantiated, warranting the penalty. RBI also clarified that the action was based on regulatory deficiencies and did not pronounce on the validity of any transaction or agreement.