Document title: RBI imposes monetary penalty on The Shimoga District Co‑operative Central Bank Ltd., Karnataka
Issuing authority: Reserve Bank of India (RBI)
Reference number: Press Release: 2026-2027/512
Date: June 22, 2026
Regulatory and Policy Measures
The Reserve Bank of India, by an order dated June 15, 2026, imposed a monetary penalty of ₹1 lakh (Rupees One Lakh only) on The Shimoga District Cooperative Central Bank Ltd., Karnataka for contravention of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act). The penalty was imposed under the powers conferred on RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
The statutory inspection of the bank was carried out by the National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2025. Following supervisory findings of statutory non‑compliance, RBI issued a notice to the bank asking it to show cause why the penalty should not be imposed. After considering the bank’s written reply and oral submissions made during a personal hearing, RBI sustained the charge that the bank had sanctioned/renewed director‑related loans, thereby violating the aforementioned provisions.
The RBI clarified that the monetary penalty is imposed solely for deficiencies in statutory compliance and does not constitute a judgment on the validity of any transaction or agreement entered into by the bank with its customers. The penalty is imposed without prejudice to any other action that may be initiated by RBI against the bank.
In summary, the RBI has exercised its regulatory authority to penalise The Shimoga District Cooperative Central Bank Ltd. for non‑compliance related to director loans, emphasizing continued supervisory oversight and the possibility of further regulatory action.