New Delhi: The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs one lakh on The Kheda People's Co-operative Bank Ltd, Gujarat, for contravention of the central bank's directions on 'Loans and advances to directors, relatives and firms'. In a circular, dated October 5, the Reserve Bank said, the penalty has been imposed "under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949."
The RBI added that the "action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers."
It further mentioned that the statutory inspection of the bank conducted, with reference to the bank's financial position as on March 31, 2019, revealed non-compliance.
Later, a notice was issued from the RBI to the bank advising it to show cause as to why penalty should not be imposed for non-compliance.
After considering the bank's reply to the notice and oral submissions made during the personal hearing, the Reserve Bank said it arrived to the conclusion that the charge was substantiated and warranted imposition of monetary penalty.
Meanwhile, the Reserve Bank will start its October review of the monetary policy on Thursday and a decision on interest rates will be announced after a three-day meet on Friday (October 8).
Analysts expect that the central bank will maintain status quo on interest rates for the eighth time in row. The current repo rate -- the rate at which RBI lends money to commercial bank -- stands at 4%.