RBI imposes monetary penalty on Mehsana Nagrik Sahakari Bank Limited, Mehsana, Gujarat

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹7.00 lakh on Mehsana Nagrik Sahakari Bank Limited, Mehsana, Gujarat, by order dated December 29, 2023. The penalty followed a statutory inspection and subsequent examination of the inspection and risk assessment reports, which found that the bank had sanctioned loans in cases where a relative of a director acted as guarantor, failed to pay interest on overdue matured term deposits at the applicable rate from maturity until repayment, and failed to transfer the eligible amount to the Depositor Education and Awareness Fund. RBI held that these actions constituted non-compliance with its directions on loans and advances to directors/related parties and deposits, as well as a contravention of section 26A(2) read with section 56 of the Banking Regulation Act, 1949.