RBI Slams Mandya Bank with ₹50,000 Penalty Over Co-operative Shareholding Violations

RBI Slams Mandya Bank with ₹50,000 Penalty Over Co-operative Shareholding Violations​

The Reserve Bank of India (RBI) has imposed a significant monetary penalty on Mandya District Cooperative Central Bank Ltd., Karnataka. The action addresses serious contravention of banking regulations concerning shareholdings in other co-operative societies.

The penalty was levied under an order dated July 17, 2026. In exercising its powers derived from the Banking Regulation Act, 1949 (BR Act), RBI fined the bank ₹50,000/-.

Violation of BR Act Leads to Penalty Imposition​

The fine stems from a contravention of section 19 read with section 56 of the BR Act. The penalty was imposed in line with powers granted under section 47A(1)(c) read with sections 46(4)(i) and 56 of the BR Act.

This regulatory action follows statutory inspection conducted by National Bank for Agriculture and Rural Development (NABARD). The inspection reviewed the bank's financial position as of March 31, 2025.

Core Charge Sustained: Shareholding Issues​

Based on supervisory findings and corresponding correspondence, RBI found that the Mandya District Cooperative Central Bank Ltd. held shares in other co-operative societies. This specific charge was sustained, leading to the imposition of the monetary penalty.

A notice had previously been issued to the bank advising it to show cause regarding why a penalty should not be imposed for failing to comply with the stipulated provisions.

Regulatory Stance and Future Implications​

The RBI clarified that this action is strictly based on deficiencies in statutory compliance. The penalty does not signify any judgment upon the validity of transactions or agreements entered into by the bank with its customers.

Furthermore, the imposition of this monetary fine is without prejudice to any other actions the RBI may initiate against the Mandya District Co-operative Central Bank Ltd. in the future.