The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 5 lakh on Mahila Co-operative Bank Ltd., Bengaluru, Karnataka, for violating regulatory norms related to loans and advances granted to directors and their related entities.
According to an RBI order, the penalty was levied under the provisions of the Banking Regulation Act, 1949, following the bank’s failure to comply with RBI directions governing loans to directors, their relatives, and firms or concerns in which they have an interest.
The action stems from RBI’s statutory inspection of the bank conducted with reference to its financial position as on March 31, 2025. During the supervisory review, the central bank observed instances where the bank had sanctioned director-related loans in contravention of regulatory guidelines.
Following the findings, RBI issued a show-cause notice to the bank and provided an opportunity for a personal hearing. After examining the bank’s response, RBI concluded that the charge was substantiated and warranted a monetary penalty.
The RBI clarified that the penalty relates solely to regulatory compliance deficiencies and does not affect the validity of transactions entered into by the bank with its customers.