Recorded RBI impact
Fine: Rs 1.50 L
Monetary penalty · Fresh imposition
Published by RBI
25 Aug 2025
Case Brief
RBI imposed a monetary penalty on The Bellary District Co-operative Central Bank Limited, Karnataka, by order dated August 19, 2025. The penalty was levied after a NABARD statutory inspection and subsequent show-cause proceedings found contraventions of Sections 19 and 20 read with Section 56 of the Banking Regulation Act, 1949. RBI sustained charges that the bank sanctioned a loan to one of its directors and held shares in another co-operative society, and imposed the penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
Why RBI Acted
Following a statutory inspection by NABARD with reference to the bank's financial position as on March 31, 2024, RBI issued a show-cause notice based on supervisory findings of contravention of statutory provisions. After considering the bank's reply and oral submissions, RBI found the charges sustained and imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act. The sustained contraventions were: sanctioning a loan to one of its directors and holding shares in another co-operative society, both in violation of the BR Act.
Operating Impact
The bank must absorb the ₹1.50 lakh penalty; the action does not itself impose an operational restriction, but it signals supervisory non-compliance and may be followed by further RBI action. The findings concern governance and statutory exposure norms, with implications for the bank's directors and investment/credit practices.
Regulatory Basis
- Sections 19 and 20 read with Section 56 of the Banking Regulation Act, 1949
- Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 1.50 L
- Order Date
- 19 Aug 2025
- Effective From
- 19 Aug 2025
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank