RBI has issued an order in this regard on 16 September 2022.
Varachha Sahakari Bank has been found guilty of contravention of the directions issued by RBI on ‘Loans and Advances to Directors etc.-Guarantor/Guarantor to Directors- Explanation-UCB’.
This penalty has been imposed in exercise of the powers vested in the Reserve Bank of India under the provisions of section 47A(1)(c) and provisions of section 46(4)(i) and 56. banking regulation act1949, taking into account the failure of the bank to comply with the aforesaid directions issued by the RBI, the RBI said.
This action is based on deficiencies in regulatory compliance and is not intended to impinge on the validity of any transaction or agreement entered into by the Bank with it. customersthe central bank said.
Statutory inspection of the bank conducted by the Reserve Bank of India with reference to the financial position of the bank as on March 31, 2021 and risk assessment report And all correspondence relating thereto revealed that the Bank had sanctioned two credit facilities to individuals in which a relative of one of its directors stood as surety/guarantor, resulting in contravention of the aforesaid directions issued by RBI.
Further to the same, a notice was issued to the bank advising it to show cause why penalty should not be imposed for violation of the aforesaid directions issued by RBI.
“After considering the bank’s reply to the notice, RBI has come to the conclusion that the said allegation is substantiated and warrants imposition of monetary penalty,” RBI said in a statement.