**Summary:**
On August 7, 2025, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹1 lakh on The Kasaragod Cooperative Town Bank Limited, Kasaragod, Kerala, for non-compliance with RBI directions concerning exposure limits to single and group borrowers, priority sector lending targets, and cyber security framework implementation. The penalty was levied under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following a statutory inspection conducted with reference to the bank's financial position as of March 31, 2024. The RBI found that the bank (i) sanctioned loans exceeding applicable group exposure limits to connected borrowers and (ii) failed to implement certain cyber security control measures as required by the RBI's Cyber Security Framework. The action is based on deficiencies in regulatory compliance and does not pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. The imposition of the penalty is without prejudice to any other action that may be initiated by the RBI against the bank. For further information, contact the Department of Communication, Central Office, Reserve Bank of India at helpdocrbi.org.in or 022-2266-0502. The press release number is 2025-2026/886.
Key Entities Referenced
Reserve Bank of India: The central bank of India, also known as RBI.
The Kasaragod Cooperative Town Bank Limited, Kasaragod, Kerala: A cooperative bank located in Kasaragod, Kerala, which was penalized by RBI.
Banking Regulation Act, 1949: An act of the Indian Parliament to regulate the banking companies in India.
Priority Sector Lending: A type of lending where banks are required to allocate a certain percentage of their lending to specific sectors of the economy, as directed by RBI.
Comprehensive Cyber Security Framework for Primary Urban Cooperative Banks: A set of guidelines and regulations issued by RBI to ensure the cybersecurity of Primary Urban Cooperative Banks.
Limits on exposure to single and group borrowers: Regulations set by RBI to restrict the amount of loans a bank can extend to a single borrower or a group of related borrowers.
Puneet Pancholy: Chief General Manager at Reserve Bank of India.
March 31, 2024: Date of the financial position reference for the statutory inspection of The Kasaragod Cooperative Town Bank Limited by RBI.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व ब ैंक
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 11, 2025
RBI imposes monetary penalty on The Kasaragod Co-operative Town Bank
Limited, Kasaragod, Kerala
The Reserve Bank of India (RBI) has, by an order dated August 07, 2025, imposed
a monetary penalty of ₹1 lakh (Rupees One Lakh only) on The Kasaragod Co-
operative Town Bank Limited, Kasaragod, Kerala (the bank) for non-compliance with
certain directions issued by RBI on ‘Limits on exposure to single and group borrowers
/ parties and large exposures and Revision in the target for priority sector lending -
UCBs’, ‘Comprehensive Cyber Security Framework for Primary (Urban) Cooperative
Banks (UCBs)’ and ‘Basic Cyber Security Framework for Primary (Urban) Cooperative
Banks (UCBs)’. 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
Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by RBI with reference to its
financial position as on March 31, 2024. Based on supervisory findings of non-
compliance with RBI directions 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 directions. After considering the
bank’s reply to the notice and oral submissions made during the personal hearing, RBI
found, inter alia, that the following charges against the bank were sustained,
warranting imposition of monetary penalty:
The bank had:
i. sanctioned loans and advances to certain connected borrowers beyond the
applicable group exposure limit; and
ii. not implemented certain cyber security control measures and requirements
under the Cyber Security Framework prescribed by RBI.
This action is based on deficiencies in regulatory 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: 2025-2026/886 Chief General Manager