(ANI): The Reserve Bank of India (RBI) said on Monday it has imposed monetary penalty on Gujarat-based The Meghraj Nagarik Sahakari Bank for non-compliance with certain directions of the central bank.
The RBI imposed ₹25,000 monetary penalty on The Meghraj Nagarik Sahakari Bank Ltd through an order dated October 13, 2022.
The Meghraj Nagarik Sahakari Bank Ltd has been penalised for contravention of directions issued by RBI on 'Loans and advances to directors etc- directors as surety/guarantors- Clarification', the RBI said in a statement.
This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) and 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by RBI, the central bank said.
"This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers," the RBI said in the statement.
The statutory inspection of the bank conducted by RBI with reference to its financial position as on March 31, 2021, the Inspection Report and Risk Assessment Report pertaining thereto and examination of all related correspondence revealed, inter alia, that the bank had sanctioned six loans, wherein directors' relatives stood as surety / guarantors, resulting in contravention of aforesaid direction issued by RBI. Based on the same a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions issued by RBI.
After considering the bank's reply to the notice and oral submissions made during the personal hearing, the RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty, the RBI said.