Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
26 Feb 2026
Case Brief
By an order dated February 23, 2026, RBI imposed a monetary penalty of ₹1 lakh on The Mahbubnagar District Co-operative Central Bank Ltd., Telangana. The penalty followed NABARD's statutory inspection and a subsequent show-cause process, after which RBI sustained the charge that the bank had sanctioned a director-related loan, contrary to Section 20 read with Section 56 of the Banking Regulation Act, 1949. RBI stated that the action was based on deficiencies in statutory compliance and without prejudice to any other action that may be initiated.
Why RBI Acted
RBI imposed a monetary penalty after a statutory inspection by NABARD found contravention of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. RBI issued a show-cause notice and, after considering the bank's reply and oral submissions, sustained the charge that the bank had sanctioned a director-related loan. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
Operating Impact
The bank must absorb the penalty and may face further supervisory action from RBI. The order does not itself impose an operating restriction, but it signals compliance concerns around connected lending and statutory lending norms.
Regulatory Basis
- Section 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 1.00 L
- Order Date
- 23 Feb 2026
- Effective From
- 23 Feb 2026
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank