The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1.5 lakh on The Chitradurga District Co-operative Central Bank Ltd. for violating provisions of the Banking Regulation Act, 1949, and failing to comply with certain Know Your Customer (KYC) norms.

The action follows a statutory inspection conducted by National Bank for Agriculture and Rural Development with reference to the bank’s financial position as of March 31, 2025. Based on the inspection findings, RBI issued a show-cause notice to the bank seeking an explanation for the regulatory lapses.

After reviewing the bank’s response and submissions during a personal hearing, RBI found that the bank had sanctioned loans to entities related to its directors, in contravention of regulatory provisions. Additionally, the bank failed to upload customer KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timelines.

The central bank clarified that the penalty pertains to deficiencies in statutory and regulatory compliance and does not affect the validity of any transactions or agreements entered into by the bank with its customers. RBI also noted that the penalty is without prejudice to any further action that may be initiated against the bank.