Section 24(7) of the Banking Regulation Act, 1949

Solution

Section 24(7) provides that when penal interest at the increased rate of five per cent above the bank rate has become payable under clause (b) of sub-section (4) and the required amount on the last day of the next succeeding fortnight is still below the prescribed minimum, every director, manager or secretary of the banking company who is knowingly and wilfully a party to the default shall be punishable with fine which may extend to five hundred rupees and with a further fine which may extend to five hundred rupees for each last day of every subsequent fortnight (or preceding working day if a public holiday) on which the default continues. This personal liability provision reinforces the institutional penalty of penal interest and creates individual accountability for senior officers who participate in the default.