RBI imposes monetary penalty on The Mahbubnagar District Co-operative Central Bank Ltd., Telangana

**Executive Summary** The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1 lakh on The Mahbubnagar District Co-operative Central Bank Ltd., Telangana. This action, effective February 23, 2026, is due to contravention of statutory provisions related to director-related loans. The penalty follows a statutory inspection conducted by NABARD as of March 31, 2025. **Key Points / Main Content** * **Penalty Imposed:** The Reserve Bank of India (RBI) has levied a monetary penalty of ₹1 lakh on The Mahbubnagar District Co-operative Central Bank Ltd., Telangana. * **Date of Order:** The RBI's order imposing the penalty is dated February 23, 2026. * **Reason for Penalty:** The penalty is for contravention of provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949 (BR Act). Specifically, the bank sanctioned director-related loans. * **RBI's Authority:** This action was taken in exercise of powers conferred on RBI under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act. * **Inspection Basis:** The penalty is based on supervisory findings from a statutory inspection of the bank conducted by the National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as of March 31, 2025. * **Process Followed:** A show cause notice was issued to the bank, and its reply and oral submissions were considered before the penalty was imposed. * **Nature of Action:** This action is based on deficiencies in statutory compliance and does not affect the validity of any transaction or agreement between the bank and its customers. It is also without prejudice to any other action RBI may initiate. **Impact Analysis** **The Mahbubnagar District Co-operative Central Bank Ltd., Telangana** * **Impact:** The bank has incurred a financial penalty of ₹1 lakh. * **Action Required:** The bank must ensure compliance with statutory provisions, particularly regarding director-related loans, to avoid future penalties or actions. **Reserve Bank of India (RBI)** * **Impact:** The RBI has exercised its regulatory and supervisory powers. * **Action Required:** No specific action is required from the RBI as this is an action taken by them. **National Bank for Agriculture and Rural Development (NABARD)** * **Impact:** NABARD conducted the statutory inspection that led to the findings. * **Action Required:** No specific action is required from NABARD as their role in this instance was supervisory.

Key Entities Referenced