Document Title: RBI imposes monetary penalty on Shri Vijay Mahantesh Co-operative Bank Limited, Hungund, Karnataka
Issuing Authority: Reserve Bank of India
Reference: Press Release: 2026-2027/955
Date: 24 August 2026
Banking and Credit
The RBI, exercising powers under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, imposed a monetary penalty of ₹2.50 lakh on Shri Vijay Mahantesh Co‑operative Bank Limited, Hungund, Karnataka. The penalty stems from the bank’s non‑compliance with RBI directions on “Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs” and on “Loans and advances to directors, their relatives, and firms/concerns in which they are interested”. A statutory inspection covering the bank’s financial position as of 31 March 2025 identified two specific breaches: (i) failure to classify certain loan accounts as non‑performing assets (NPAs); and (ii) sanctioning of loans to directors or related parties.
Regulatory and Policy Measures
Following the inspection, RBI issued a show‑cause notice requiring the bank to explain why the penalty should not be imposed. After considering the bank’s written reply and oral submissions made during a personal hearing, RBI upheld the charges and imposed the penalty, stating that the action does not prejudice any further regulatory measures that may be taken against the bank. The press release is signed by the Chief General Manager, Brij Raj.
The RBI’s action underscores its continued emphasis on strict adherence to asset classification, provisioning norms and the prohibition of director‑related lending in urban cooperative banks.