RBI Slaps ₹50,000 Penalty on The Citizen Co-operative Bank for Failing NPA Classification Standards
The Reserve Bank of India (RBI) has imposed a monetary penalty on The Citizen Co-operative Bank Limited, Bangalore, Karnataka. This action follows findings from an RBI inspection concerning the bank's adherence to critical regulatory guidelines regarding income recognition and asset classification.The fine was levied in exercise of powers conferred under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The penalty amounts to ₹ 50,000 (Rupees Fifty Thousand only).
Basis of Penalty: Non-Compliance in Asset Classification
The action was taken following supervisory findings from a financial inspection conducted by RBI referencing the bank’s position as on March 31, 2025. A notice was issued to the bank advising it to show cause regarding non-compliance with specific directions issued by the central regulator.After reviewing the bank's response and oral submissions during a personal hearing, the RBI sustained a specific charge against The Citizen Co-operative Bank Limited. The primary lapse identified was the failure to classify certain loan accounts correctly as non-performing assets (NPAs).
Regulatory Oversight and Fine Imposition
The regulatory directive relates specifically to 'Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs'. This oversight highlights continuous scrutiny by the RBI toward co-operative banks regarding their financial prudence.RBI stated that the penalty is intended solely as a measure of deficiencies in regulatory compliance. The order was issued on July 17, 2026.
The imposition of this monetary penalty does not prejudice any other action that may be initiated by the Reserve Bank of India against the bank. Furthermore, the RBI clarified that the penalty is focused on regulatory adherence and is not meant to pronounce upon the validity of any transaction or agreement the bank entered into with its customers.
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