Document title: RBI imposes monetary penalty on The Chikmagalur District Co-operative Central Bank Ltd., Karnataka
Issuing authority: Reserve Bank of India (RBI)
Reference number: Press Release: 2026-2027/561
Date: June 29, 2026
Banking and Credit
The Reserve Bank of India, by an order dated June 25, 2026, imposed a monetary penalty of ₹1 lakh on The Chikmagalur District Co-operative Central Bank Ltd., Karnataka. The penalty arises from a contravention of Section 20 read with Section 56 of the Banking Regulation Act, 1949, wherein the bank was found to have sanctioned director‑related loans. The statutory inspection that led to this finding was conducted by the National Bank for Agriculture and Rural Development (NABARD) with reference to the bank’s financial position as on March 31, 2025. Following the inspection, RBI issued a notice to the bank asking it to show cause why the penalty should not be imposed. After considering the bank’s reply and oral submissions made during a personal hearing, RBI sustained the charge and imposed the penalty.
Regulatory and Policy Measures
The penalty is imposed under RBI’s powers conferred by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act. RBI clarified that the action is based on deficiencies in statutory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. The monetary penalty is imposed without prejudice to any other action that may be initiated by RBI against the bank.
The RBI’s enforcement underscores its commitment to ensuring compliance with banking regulations, particularly concerning director‑related lending, and signals that supervisory findings will be acted upon decisively.