The correct option is A impounded
If something (here, the driver's license) is impounded by the police, customs officers or other officials, they officially take possession of it because a law or rule has been broken (here, "rash driving"). Impounded thus means seized in a specific context. Hence option A is correct.
Option B - prescribed means to specify a required procedure.
Option C - suspended means to stop or interrupt.
Option D - penalized means to punish and a license can't be punished, a person is punished.
Hence options B, C and D are incorrect.