The Reserve Bank of India (RBI) has imposed a monetary penalty of ?1 lakh on The Karimnagar District Co-operative Central Bank Ltd., Telangana, for violating provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. The penalty order was issued on June 23, 2025, under the powers vested in the RBI through Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Act.

The violation was identified during a statutory inspection conducted by the National Bank for Agriculture and Rural Development (NABARD), based on the bank’s financial position as of March 31, 2024. Following the inspection, RBI issued a show-cause notice to the bank. After reviewing the bank’s response and oral submissions during a personal hearing, RBI concluded that the bank had breached regulatory provisions by sanctioning loans to its own directors.

RBI clarified that the penalty pertains solely to non-compliance with statutory norms and does not affect the validity of any customer transactions or agreements. The action is without prejudice to any further regulatory measures the RBI may take against the bank.