**Summary:**
On August 19, 2025, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹1 lakh on The Dharmapuri District Central Cooperative Bank Ltd., Tamil Nadu, for contravention of Section 20 read with Section 56 of the Banking Regulation Act, 1949. The penalty was imposed under the powers conferred on RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the same Act. The action was initiated following a statutory inspection by NABARD with reference to the bank's financial position as of March 31, 2024, which revealed that the bank had sanctioned loans to its directors. After considering the bank's response to a show-cause notice and oral submissions during a personal hearing, RBI sustained the charge against the bank. The RBI clarified that this action is based on deficiencies in statutory compliance and does not reflect on the validity of transactions with customers and that this penalty is without prejudice to any other action that may be initiated by RBI against the bank. Contact information for inquiries is available through the Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001, email: helpdoc@rbi.org.in, Phone: 022 – 2266 0502. The press release number is 2025-2026/972.
Key Entities Referenced
Reserve Bank of India: The central bank of India, also referred to as RBI.
The Dharmapuri District Central Cooperative Bank Ltd., Tamil Nadu: A cooperative bank in Tamil Nadu, India, which was penalized by the RBI.
Banking Regulation Act, 1949: Indian Legislation under which banks operate in India
National Bank for Agriculture and Rural Development: An apex development finance institution in India, also referred to as NABARD.
Section 20: Section of Banking Regulation Act
Section 56: Section of Banking Regulation Act
Section 47A1c: Section of Banking Regulation Act
Section 464i: Section of Banking Regulation Act
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
August 25, 2025
RBI imposes monetary penalty on The Dharmapuri District Central
Co-operative Bank Ltd., Tamil Nadu
The Reserve Bank of India (RBI) has, by an order August 19, 2025, imposed a
monetary penalty of ₹1 lakh (Rupees One Lakh only) on The Dharmapuri District
Central Co-operative Bank Ltd., Tamil Nadu (the bank) for contravention of provisions
of Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act).
This penalty has been imposed in exercise of powers conferred on RBI under the
provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
The statutory inspection of the bank was conducted by National Bank for
Agriculture and Rural Development (NABARD) with reference to its financial position
as on March 31, 2024. Based on supervisory findings of contravention of statutory
provisions and related correspondence in that regard, a notice was issued to the
bank advising it to show cause as to why penalty should not be imposed on it for its
failure to comply with the said provisions. After considering the bank’s reply to the
notice and oral submissions made during the personal hearing, RBI found, inter alia,
that the following charge against the bank was sustained, warranting imposition of
monetary penalty:
The bank had sanctioned loans to its directors.
This action is based on deficiencies in statutory compliance and is not intended to
pronounce upon the validity of any transaction or agreement entered into by the bank
with its customers. Further, imposition of this monetary penalty is without prejudice to
any other action that may be initiated by RBI against the bank.
(Puneet Pancholy)
Press Release: 2025-2026/972 Chief General Manager