The Reserve Bank of India has imposed a monetary penalty of Rs. 5.00 lakh (Rupees Five Lakh only) on Kisan Nagari Sahakari Bank Maryadit, Parbhani in exercise of powers vested in it under the provisions of Section 47A (1) (b) read with Section 46(4) of the Banking Regulation Act, 1949 (As Applicable to Co-operative Societies) for violation of the provisions of Section 35(2) and 46(1) of the Banking Regulation Act relating to non disclosure of Bank Guarantee issued and the directives issued by Reserve Bank of India on Guarantees, Co-Acceptance and Letter of Credit.

The Reserve Bank of India had issued a show cause notice to the bank, in response to which the bank submitted a written reply. 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 penalty.

Ajit Prasad

Assistant General Manager

Non-disclosure of bank guarantee: regulatory penalty under Banking Regulation Act imposed after RBI found statutory violations. Non-disclosure of a bank guarantee by Kisan Nagari Sahakari Bank Maryadit violated disclosure obligations under Sections 35(2) and 46(1) of the Banking Regulation Act and RBI directives on guarantees, co-acceptance and letters of credit. The Reserve Bank issued a show cause notice, considered the bank's written reply, found the violations substantiated and exercised its powers under Section 47A(1)(b) read with Section 46(4) to impose a monetary penalty.