Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
15 May 2025
Case Brief
By order dated May 09, 2025, RBI imposed a monetary penalty of ₹2.00 lakh on The Karnataka Central Co-operative Bank Ltd, Dharwad, Karnataka. The penalty was based on contravention of Section 20 read with Section 56 of the Banking Regulation Act, 1949, after supervisory findings and a show-cause notice process. RBI stated that the bank had sanctioned director-related loans, and 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 as of March 31, 2024.
Why RBI Acted
RBI imposed a monetary penalty after supervisory findings and a show-cause process concluded that the bank had contravened statutory provisions by sanctioning loans related to directors. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following an inspection by NABARD with reference to the bank's financial position as on March 31, 2024.
Operating Impact
The bank must absorb the monetary penalty; the release does not impose a new operational restriction. RBI also notes the penalty is without prejudice to any other action that may be initiated separately, so further supervisory or enforcement action remains possible.
Regulatory Basis
- Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act)
- Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Order Date
- 9 May 2025
- Effective From
- 9 May 2025
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank