RBI imposes monetary penalty on The Shimoga District Co-operative Central Bank Ltd., Karnataka
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹1.00 lakh on The Shimoga District Co-operative Central Bank Ltd., Karnataka, after NABARD’s statutory inspection and subsequent supervisory proceedings. RBI found that the bank had sanctioned director-related loans, constituting contravention of Section 20 read with Section 56 of the Banking Regulation Act, 1949. The penalty was levied under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Act.
RBI imposed a monetary penalty after supervisory findings and a show-cause process established that the bank had sanctioned loans related to directors, violating Section 20 read with Section 56 of the Banking Regulation Act, 1949. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act, following NABARD’s statutory inspection with reference to the bank’s financial position as on March 31, 2024.
Severity Assessment
This is a monetary penalty of ₹1 lakh, which falls in the lowest monetary severity band.
The bank must absorb the monetary penalty and remain mindful of compliance with restrictions on director-related lending under the Banking Regulation Act. The order does not itself impose an operational restriction, but RBI noted that further action may still be initiated separately.
Published as The Shimoga District Co-operative Central Bank Ltd., Karnataka
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