The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹50,000 on Janseva Co-operative Bank Limited, located in Nashik, Maharashtra, citing non-compliance with regulatory directives related to ‘Loans and Advances to directors, relatives, and firms/concerns in which they are Interested.’ This action, taken on February 13, 2024, is rooted in deficiencies identified during the statutory inspection of the bank’s financial position as of March 31, 2022.
Regulatory Basis for Penalty
The penalty, exercised under the authority vested in the RBI by Section 47A(1)(c) in conjunction with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, emphasizes the importance of adherence to prescribed guidelines. The violation pertains to the bank’s handling of director-related loans and instances where a director’s relative acted as a guarantor for a sanctioned loan.
Background and Inspection Findings
The regulatory scrutiny initiated by RBI focused on the bank’s financial status as of March 31, 2022. The examination revealed two key infractions: the approval of a director-related loan and the sanctioning of a loan with a director’s relative serving as a guarantor. In response, the bank was issued a notice, calling upon it to justify why a penalty should not be levied for non-compliance with RBI directives.
RBI’s Decision
Following the bank’s response to the notice, oral submissions during a personal hearing, and subsequent additional submissions, the RBI concluded that the charges of non-compliance were substantiated. Consequently, the monetary penalty of ₹50,000 was deemed appropriate.
It’s essential to note that this regulatory action is centered on identified deficiencies in compliance and does not pass judgment on the validity of specific transactions or agreements entered into by the bank with its customers.
