The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 2.50 lakh on Shri Vijay Mahantesh Co-operative Bank Ltd, Hungund, Karnataka, for non-compliance with regulatory norms concerning income recognition, asset classification, provisioning and loans to directors and their related entities.

The penalty was imposed through an order dated August 20, 2026, under the provisions of the Banking Regulation Act, 1949.

The action followed an RBI statutory inspection of the bank’s financial position as of March 31, 2025. After reviewing the bank’s response to the show-cause notice and submissions made during a personal hearing, the central bank found two regulatory lapses.

The bank was found to have failed to classify certain loan accounts as non-performing assets (NPAs) and had sanctioned loans related to directors.

RBI clarified that the penalty pertains to regulatory compliance deficiencies and does not represent a ruling on the validity of transactions or agreements between the bank and its customers. The action is also without prejudice to any other proceedings that may be initiated by the central bank.