Reserve Bank of India has imposed a monetary penalty of Rs 10.10 lakh on City Union Bank Limited for non-compliance with certain RBI directions related to priority sector lending and reporting of Self Help Group (SHG) member data to Credit Information Companies (CICs).

The penalty was imposed through an order dated May 20, 2026, under provisions of the Banking Regulation Act, 1949 and the Credit Information Companies (Regulation) Act, 2005.

According to RBI, the action follows the Statutory Inspection for Supervisory Evaluation (ISE) conducted with reference to the bank’s financial position as of March 31, 2025. Based on supervisory findings and subsequent correspondence, the central bank issued a show-cause notice to the bank.

After reviewing the bank’s written response and oral submissions during the personal hearing, RBI found that the bank had levied loan-related charges on certain agriculture priority sector loans up to Rs 25,000, which was not in line with regulatory directions.

The regulator also observed that the bank failed to report SHG member-level data to Credit Information Companies.

RBI clarified that the penalty has been imposed due to deficiencies in statutory and regulatory compliance and does not affect the validity of any transaction or agreement entered into by the bank with its customers. The central bank also stated that the action is without prejudice to any further measures that may be initiated against the bank.