The Reserve Bank of India (RBI) has imposed a Rs. 75,000 penalty on the Rajapalayam Co-operative Urban Bank for non-compliance with directions relating to loans and advances to directors, their relatives, and firms and concerns in which they are interested.
The penalty was imposed on the bank for failing to comply with the statutory inspection report submitted by RBI on March 31, 2022. According to a release from RBI, the bank had extended loans to the relatives of directors and sanctioned loans to nominal members in excess of the prescribed ceiling.
RBI said that it found, inter alia, that the bank had violated the provisions of section 47A (1) (c) of the Banking Regulation Act, 1949, by sanctioning loans to nominal members in excess of the prescribed ceiling. It also found that the bank had extended loans to the relatives of directors for repayment to them, thereby violating the statutory requirement that a loan made by a financial institution to a minor would not be available for repayment by the borrower.
The RBI said that the penalty amount is without prejudice to any other action that may be taken by RBI against the bank. The penalty has been imposed by exercising powers vested in RBI under the provisions of section 47A (1) (c) of the Banking Regulation Act, 1949.
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