MUMBAI (India CSR): The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs. 50,000 on The Bharat Co-operative Bank Limited, Bengaluru, Karnataka. The order was issued on August 19, 2025.
The penalty was imposed for non-compliance with directions issued under the Supervisory Action Framework (SAF). RBI acted under powers conferred by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
RBI Inspection and Findings
RBI conducted a statutory inspection of the bank with reference to its financial position as on March 31, 2024.
The inspection revealed serious lapses in adherence to supervisory guidelines.
A show-cause notice was issued.
The bank submitted replies and oral submissions.
RBI, after examination, found the charges sustained.
Violations by the Bank
The violations under SAF were significant:
- The bank sanctioned and renewed credit facilities to sectors already under stress with high NPAs and defaults.
- It sanctioned and disbursed fresh loans without collateral security against term deposits.
- It offered higher interest rates on deposits than those offered by the State Bank of India (SBI).
These actions were in clear breach of RBI’s directives.
RBI’s Clarification
RBI clarified that this action was based on regulatory compliance deficiencies.
It does not affect the validity of customer transactions.
The central bank added that this penalty is without prejudice to other supervisory actions that may be taken against the bank.
Significance of the Action
This penalty highlights RBI’s strict monitoring of co-operative banks.
Non-compliance with SAF directions is taken seriously to safeguard depositor interest.
The case sends a warning to co-operative banks against high-risk lending practices and deposit mismanagement.
(India CSR)
