The Reserve Bank of India has imposed a monetary penalty of Rs. 5.00 lakh (Rupees Five Lakh only) on the Janata Urban Co-operative Bank Ltd, Wai, Satara in exercise of the 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 directives / guidelines of the Reserve Bank of India on unsecured advances, loans and advances to the firms in which the directors and their relatives are interested, exposure to housing, real estate & commercial real estate and single and group exposure. The bank had created floating charges on standard assets without prior approval from RBI and also the bank was not doing the risk categorisation of its customers.

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

Regulatory enforcement for banking directive violations results in a penalty after show cause process and substantiated breaches. Regulatory enforcement under the Banking Regulation Act led to a monetary penalty on Janata Urban Co-operative Bank for breaches of RBI directives concerning unsecured advances, related party lending, concentrated exposure to housing and real estate, and single/group exposure limits; the bank also created floating charges on standard assets without prior RBI approval and failed to perform customer risk categorisation. The Reserve Bank issued a show cause notice, considered the bank's written reply, found the violations substantiated and imposed the penalty.