The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1 lakh on The Kodagu District Co-operative Central Bank Limited, Karnataka, for violation of provisions under the Banking Regulation Act, 1949.

The penalty, issued through an order dated March 20, 2026, relates to contravention of Section 20 read with Section 56 of the Act. The action follows supervisory findings based on a statutory inspection carried out by NABARD with reference to the bank’s financial position as on March 31, 2025.

According to the RBI, the bank had sanctioned loans to its directors, which constitutes a breach of regulatory provisions. After issuing a show-cause notice and reviewing the bank’s response along with oral submissions, the central bank concluded that the charge was sustained, warranting the penalty.

The RBI clarified that the action is based on lapses in statutory compliance and does not impact the validity of any transactions or agreements between the bank and its customers. It also stated that the penalty is without prejudice to any further regulatory action that may be initiated.