RBI imposes ₹5 lakh penalty on Mahila Co-operative Bank, Bengaluru

The Reserve Bank of India (RBI) has imposed a ₹5 lakh penalty on Mahila Co-operative Bank Ltd., Bengaluru, for violating its guidelines on loans to directors and related entities. The penalty was issued on June 11, 2026, following an inspection of the bank’s financial position as of March 31, 2025.

The RBI found that the bank had sanctioned loans to its directors, their relatives, and associated firms, which is a breach of its regulatory directions. A statutory inspection revealed these irregularities, leading to a show-cause notice being issued to the bank. After reviewing the bank's response and oral submissions, the RBI determined that the violations warranted monetary action.

The penalty was imposed under the variable Banking Regulation Act, 1949, specifically under Section 47A(1)(c) read with Sections 46(4)(i) and 56. The RBI clarified that this action addresses regulatory non-compliance and does not affect the validity of transactions between the bank and its customers.

This move underscores the RBI’s commitment to ensuring adherence to banking regulations, particularly in areas involving governance and conflict of interest. The penalty serves as a reminder to banks to maintain strict compliance with RBI directives to uphold transparency and accountability in their operations.

Key Points
- RBI fined Mahila Co-operative Bank ₹5 lakh for non-compliance.
- The bank violated rules on loans to directors and related entities.
- Inspection was based on the bank's financial position as of March 31, 2025.
- Penalty imposed under Banking Regulation Act, 1949 provisions.
- Action addresses regulatory lapses, not customer transactions.

FAQ

Why was Mahila Co-operative Bank fined by RBI?
The bank violated RBI guidelines by sanctioning loans to directors and related entities.

What law was the penalty imposed under?
The penalty was imposed under the Banking Regulation Act, 1949.