A recent press report said that Pravara Sahakari Bank Limited has been penalised by the Reserve Bank of India , in exercise of powers vested in it under the provisions of Section 47(A)(1)(b) read with Section 46(4) of the Banking Regulation Act, 1949 (As applicable to Co-operative Societies), for violation of directives/guidelines of the Reserve Bank of India on maximum limit on advances as modified from time to time, by sanctioning loans to trusts managing different colleges in excess of the single borrower norm.
The central bank has imposed a fine of Rs. 5 Lakhs on the bank. 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 bank’s reply in the matter and submissions made in the personal hearing, the Reserve Bank of India came to the conclusion that the violation was substantiated and warranted imposition of the penalty.
The RBI has recently hiked base rates by 25 basic points, in order to control inflation. The hike in base rate has affected the home loan and other loan borrowers as the hike in base rates by the RBI has pushed banks to hike their lending rates.