Recorded RBI impact
Fine: Rs 2.50 L
Monetary penalty · Fresh imposition
Published by RBI
24 Aug 2026
Case Brief
RBI, by order dated August 20, 2026, imposed a monetary penalty of ₹2.50 lakh on Shri Vijay Mahantesh Co-operative Bank Limited, Hungund, Karnataka. The penalty followed a statutory inspection and subsequent show-cause notice, and was imposed under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. RBI sustained charges that the bank failed to classify certain loan accounts as NPAs and sanctioned loans to directors-related parties, contrary to 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.
Why RBI Acted
RBI imposed a monetary penalty under section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after a statutory inspection and show-cause process. The sustained charges were that the bank did not classify certain loan accounts as non-performing assets and sanctioned loans related to directors, in violation of RBI directions on Income Recognition, Asset Classification, Provisioning and Other Related Matters for UCBs and on loans and advances to directors, their relatives, and firms/concerns in which they are interested.
Operating Impact
The bank must bear the penalty and remains exposed to any further supervisory or enforcement action RBI may choose to initiate. The release does not describe any direct operational restriction, but it underscores continued compliance expectations around NPA recognition and restrictions on director-related lending.
Regulatory Basis
- section 47A(1)(c) read with sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 2.50 L
- Order Date
- 20 Aug 2026
- Effective From
- 20 Aug 2026
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank