The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1 lakh on The Karnataka Co-operative Bank Limited, Muddebihal, Karnataka, for non-compliance with regulatory directions related to exposure norms and Know Your Customer (KYC) requirements. The penalty was issued through an order dated June 23, 2025, under the powers granted by Section 47A(1)(c), read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The penalty follows a statutory inspection conducted by the RBI based on the bank’s financial position as of March 31, 2024. Upon identifying regulatory shortcomings, the RBI issued a show-cause notice to the bank seeking an explanation for the non-compliance. After reviewing the bank’s written response and oral submissions during a personal hearing, the RBI concluded that the violations warranted penal action.

Key violations included breaching prudential inter-bank (gross) and counterparty exposure limits, as well as failing to upload customer KYC data to the Central KYC Records Registry within the mandated timeline.

The RBI emphasized that the penalty is related to regulatory deficiencies and does not question the validity of any customer transactions or agreements. This action is without prejudice to any further regulatory measures the RBI may undertake against the bank.