RBI has recently penalised the Gujarat Based Mehsana Urban Co-operative Bank for contravention of norms on ‘loans and advances to directors, relatives and firms/concerns in which they are interested’.
It said that the penalty was imposed through an order.
The central bank, after the statutory inspection on March 2018 said that the penalty was “for contravention of the directions issued by RBI on ‘Loans and Advances to Directors, Relatives and Firms/Concerns in which they are Interested’, and non-compliance with the Master Directions on ‘Know Your Customer (KYC)'”
However, RBI has cleared that the penality is for non compliance of the regulatory requirements and is not on the validity of the transactions and agreement with customers by the Mehsana based bank.
RBI issued the notice after the statutory inspection.
After recieving the reply from the bank and the oral submissions in the personal hearing, RBI concluded that the charges for non compliance are imposed as per the RBI directions which was required and hence penalized.