**Executive Summary**
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.50 lakh on The South Canara District Central Co-operative Bank Ltd, Karnataka, due to non-compliance with RBI directions on housing finance and contravention of Section 19 read with Section 56 of the Banking Regulation Act. The penalty was issued on September 23, 2025, and this press release is dated September 25, 2025. The decision followed a statutory inspection by NABARD as of March 31, 2024, and subsequent notice to the bank.
**Key Points / Main Content**
* **Penalty:**
* RBI imposed a monetary penalty of ₹1.50 lakh on The South Canara District Central Co-operative Bank Ltd.
* **Reasons for Penalty:**
* Non-compliance with RBI directions on 'Housing finance' and 'Enhancement in Individual housing loan limits and credit to Commercial Real Estate - Residential Housing (CRE-RH)'.
* Contravention of provisions of Section 19 read with Section 56 of the Banking Regulation Act, 1949 (BR Act).
* **Authority:**
* The penalty was imposed under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.
* **Background:**
* The statutory inspection of the bank was conducted by NABARD with reference to its financial position as on March 31, 2024.
* **Bank's Violations:**
* Breached the prudential exposure limits on housing finance.
* Held shares in other co-operative society in contravention of BR Act.
* **Disclaimer:**
* The action does not pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
* The penalty is without prejudice to any other action that may be initiated by RBI against the bank.
**Impact Analysis**
**The South Canara District Central Co-operative Bank Ltd, Karnataka**
**Impact**
The bank is impacted by a monetary penalty of ₹1.50 lakh. The bank's reputation may be affected due to the penalty, and it may face increased scrutiny from regulatory bodies.
**Action Required**
The bank must pay the penalty amount of ₹1.50 lakh to RBI. The bank must also take corrective measures to ensure compliance with RBI directions on housing finance and adherence to the Banking Regulation Act to prevent future violations.
Key Entities Referenced
Reserve Bank of India (RBI): Imposing monetary penalty
The South Canara District Central Co-operative Bank Ltd, Karnataka: Entity on which monetary penalty is imposed
Banking Regulation Act, 1949 (BR Act): Act under which penalty has been imposed
National Bank for Agriculture and Rural Development (NABARD): Conducted statutory inspection of the bank
Housing finance: RBI directions on ‘Housing finance' read with 'Enhancement in Individual housing loan limits and credit to Commercial Real Estate - Residential Housing (CRE-RH)'
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
September 25, 2025
RBI imposes monetary penalty on The South Canara District Central Co-
operative Bank Ltd, Karnataka
The Reserve Bank of India (RBI) has, by an order dated September 23, 2025,
imposed a monetary penalty of ₹1.50 lakh (Rupees One Lakh Fifty Thousand only)
on The South Canara District Central Co-operative Bank Ltd, Karnataka (the bank)
for non-compliance with certain directions issued by RBI on ‘Housing finance’ read
with ‘Enhancement in Individual housing loan limits and credit to Commercial Real
Estate - Residential Housing (CRE-RH)’ and contravention of provisions of Section
19 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 / 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 and
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 charges
against the bank were sustained, warranting imposition of monetary penalty:
The bank had:
i) breached the prudential exposure limits on housing finance; and
ii) held shares in other co-operative society in contravention of B R Act.
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: 2025-2026/1170 Chief General Manager