RBI Imposes Rs 5 Lakh Penalty on Mahila Co-operative Bank for Regulatory Violations

The Reserve Bank of India (RBI) has imposed a penalty of Rs 5 lakh on Mahila Co-operative Bank Ltd, Bangalore, Karnataka for violating RBI rules related to loans extended to directors, their relatives and businesses linked to them. The penalty was imposed through an order dated June 11, 2026, under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The Reserve Bank of India (RBI) conducted a statutory inspection of the bank to review its financial position as of March 31, 2025. During the inspection, the RBI observed that the bank failed to comply with some regulatory directions. Consequently, the RBI issued a show-cause notice asking the bank to explain as to why penalty should not be imposed on it.

The bank replied to the notice and made oral submissions at the personal hearing. After taking into account the bank’s reply and the oral submissions, the RBI held that the bank had violated the directions issued by the RBI. Accordingly, the RBI decided to levy a monetary penalty on the bank.

The RBI noted that the bank had extended loans to its directors or related parties, which was in contravention of the regulatory guidelines of the RBI. The central bank clarified that the penalty was being imposed for non-compliance with regulatory directions and the validity of any transactions or agreements entered into between the bank and its customers was not affected. The RBI also stated that if required they can take further action and this penalty does not prevent them from taking it.