The Reserve Bank of India has, 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) imposed a monetary penalty of Rs.5.00 lakh (rupees five lakh only) on the Jamkhed Merchants Co-operative Bank Ltd., Jamkhed, Dist. Ahmednagar for violation of the Reserve Bank of India’s directives dated October 1, 2003 prohibiting loans and advances to directors and their relatives and the firms/companies/concerns in which they are interested with effect from the above date and directive dated April 1, 2000 on credit exposure limits for individual borrowers.

The Reserve Bank of India had issued a show cause notice to the bank, in response to which the bank submitted a written reply. Based on the reply and the action taken by the bank in this regard, the Reserve Bank of India came to the conclusion that the violation was substantiated and warranted imposition of penalty. Accordingly it penalised the bank.