The fine has been imposed on the Thane-based bank under the provisions of Banking Regulation Act, 1949, the RBI said in a release.
The Reserve Bank has imposed a fine of Rs 4 lakh on Konark Urban Co-operative Bank for violating guidelines on director-related loans. The fine has been imposed on the Thane-based bank under the provisions of Banking Regulation Act, 1949, the RBI said in a release. The penalty (as applicable on co-operative societies) is imposed for violations of RBI instructions on director-related loans, it added.
The RBI said it had issued a show cause notice to the bank, in response to which it submitted a written reply and also made oral submissions thereon. “After considering the facts of the case and the bank’s reply in the matter, the Reserve Bank came to the conclusion that the violations were substantiated and warranted imposition of the monetary penalty,” RBI said.
Cooperative banks are prohibited from making or renewing either secured or unsecured loans and advances or extending any other financial accommodation to their directors.
They are not allowed to extend the same to their relatives, firms/concerns in which they are interested with effect from October 1, 2003. However, the existing advances may be allowed to continue uptil the date they are due.