RBI imposed a fine of Rs 50,000 on Mandya District Co-operative Central Bank

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RBI fined Mandya Bank

Highlights

RBI imposed a fine of Rs 50,000 on Mandya District Co-operative Central Bank for violation of the Banking Regulation Act.
In response to NABARD's inspection report and the show cause notice, the RBI found the allegation of improper shareholding in cooperative societies to be valid.
This move by the RBI serves as a warning to regional cooperative banks about financial penalties and further regulatory scrutiny for compliance lapses.

This article was translated from the original. Read the original version by our correspondent here.

Basis of Penalty and Regulatory Process

According to the RBI press release, this penalty was imposed for violations of Section 19 read with Section 56 of the Banking Regulation Act. The central bank took this action using powers under Section 47A(1)(c), Section 46(4)(i), and Section 56.

The matter came to light after a statutory inspection conducted by the National Bank for Agriculture and Rural Development (NABARD) regarding the bank's financial position as of March 31, 2025. Based on supervisory findings and related correspondence, a show cause notice was issued to the bank, asking why a penalty should not be imposed for non-compliance with the relevant provisions.

After considering the bank's written response and oral submissions during the personal hearing, the RBI found that the bank had held shares in other cooperative societies in violation of the Banking Regulation Act. According to the central bank, this charge was upheld and formed the basis for the monetary penalty.

Impact on the Cooperative Banking Sector

The RBI clarified that this action is based on deficiencies in statutory compliance and is not intended to comment on the validity of any transaction or agreement entered into by the bank with its customers. The regulator also stated that this penalty does not affect any other actions it may initiate in the future.

This move indicates that monitoring of compliance with statutory provisions related to investments and shareholding in cooperative banks remains strict. For regional cooperative banking institutions, including those in Karnataka, this is a message that compliance lapses found during inspections can directly lead to financial penalties and further regulatory scrutiny.

In our previous report, we highlighted the process by which NSE sought explanations from companies with unusual trading volumes or sharp price fluctuations in several stocks. It detailed which companies were sent letters, whose responses are available in corporate filings, and in which cases responses are still awaited—so that investors receive timely relevant information and market transparency is maintained.

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