The Reserve Bank of India (RBI) has imposed monetary penalties totalling Rs 5.50 lakh on three Karnataka-based cooperative banks for various violations and regulatory lapses, including failure to classify loans as non-performing assets (NPAs), sanctioning director-related loans and breaching exposure limits.
The penalties were imposed through orders dated August 20, 2026, following statutory inspections based on the banks’ financial positions as of March 31, 2025.
Vikas Souharda Co-operative Bank Ltd, Hosapete, was fined Rs 1 lakh for failing to classify certain loan accounts as NPAs.
The Pragathi Co-operative Bank Ltd, Karnataka, was slapped with a Rs 2 lakh penalty for sanctioning loans to directors, breaching the prescribed single-borrower exposure limit, and exceeding prudential inter-bank exposure and counter-party limits.
Meanwhile, Shri Vijay Mahantesh Co-operative Bank Ltd, Hungund, was penalised Rs 2.50 lakh for failing to classify certain loan accounts as NPAs and sanctioning director-related loans.
RBI said the penalties relate to deficiencies in statutory and regulatory compliance and do not question the validity of transactions or agreements entered into by the banks with their customers. The action is also without prejudice to any other action that may be initiated against the banks.
