RBI imposes monetary penalty on Nagarik Sahakari Bank Ltd., Babra, Gujarat

Case Brief

The Reserve Bank of India imposed a monetary penalty of Rs 2.00 lakh on Nagarik Sahakari Bank Ltd., Babra, Gujarat, by order dated September 18, 2023. The penalty was levied for contravention of Section 26A(2) of the Banking Regulation Act, 1949 and RBI directions on loans and advances to directors/related parties, placement of deposits with other banks by primary (urban) co-operative banks, and interest rate on deposits. RBI's inspection found that the bank had not transferred the eligible amount to the Depositor Education and Awareness Fund, had sanctioned a credit facility where a relative of a director was guarantor, had breached inter-bank gross exposure and counterparty exposure limits, and had not paid interest on matured unpaid term deposits for the period they remained unclaimed. RBI said the penalty was based on deficiencies in regulatory compliance and did not pronounce on the validity of any transaction or agreement with customers.