RBI Penalizes Amravati Merchants Bank with ₹50,000 for Violating Director Loan Guidelines
The Reserve Bank of India (RBI) has imposed a significant monetary penalty on The Amravati Merchants Sahakari Bank Ltd. regarding non-compliance with regulatory directions. The action underscores the central bank's stringent oversight concerning lending practices to directors and their related interests within financial institutions.RBI Imposes Monetary Penalty on AMSB for Non-Compliance
The Reserve Bank of India (RBI) announced a monetary penalty of ₹50,000/- against The Amravati Merchants Sahakari Bank Ltd. in an order dated June 4, 2026. This penalty was levied due to the bank's failure to adhere to specific directions concerning 'Loans and Advances to Directors, their Relatives, and Firms/Concerns in which they are Interested'.The imposition of this fine is conducted under powers granted to RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The penalty action signals a direct enforcement measure against deficiencies in regulatory compliance within the banking sector.
Supervisory Findings Lead to Penalty
The decision was reached after statutory inspections were conducted by RBI concerning the bank's financial position as of March 31, 2025. Following these supervisory findings indicating non-compliance with specific RBI directives and related correspondence, a notice was initially issued to the institution.After reviewing the bank’s response, additional submissions, and oral arguments made during a personal hearing, RBI confirmed the charge against the bank. The investigation found that the Amravati Merchants Sahakari Bank Ltd. had sanctioned certain loans related to its directors.
Clarification on Penalty Imposition
The regulatory action is strictly based on deficiencies in compliance, not on questioning the fundamental validity of any transactions or agreements conducted by the bank with its clientele. RBI confirmed that this monetary penalty does not prejudice any other possible action that may be initiated against The Amravati Merchants Sahakari Bank Ltd. in the future.Disclaimer: Due care and diligence have been taken in compiling and presenting news and market-related content. However, errors or omissions may arise despite such efforts.
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