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RBI Slaps Monetary Penalties on Karnataka Gramin Bank and SCDCC Bank for Regulatory Non-Compliance.

Banking & Finance | Dated: 07 Apr 2025

In March 2025, the Reserve Bank of India (RBI), headquartered in Mumbai, Maharashtra, imposed monetary penalties on two Karnataka-based banks—Karnataka Gramin Bank and South Canara District Central Co-operative Bank Limited (SCDCC Bank)—for non-compliance with specific regulatory guidelines.

🎯 Key Highlights:

  • - The action was taken based on the findings of a statutory inspection conducted by the National Bank for Agriculture and Rural Development (NABARD), referencing the financial position of the banks as on March 31, 2023.
  • - Karnataka Gramin Bank was penalized ₹1 lakh by the RBI for non-compliance with the Income Recognition, Asset Classification, and Provisioning (IRACP) norms, 1996. The bank failed to classify certain loan accounts appropriately as Non-Performing Assets (NPAs).

💡 Other Important Facts:

  • (i) SCDCC Bank faced a penalty of ₹5 lakh for violating provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949, by sanctioning loans to its own directors.
  • (ii) The penalties were imposed under Section 47A(1)(c) of the Banking Regulation Act, 1949, for deficiencies in regulatory compliance.
  • (iii) These enforcement actions by the RBI are based on deficiencies in regulatory compliance and do not question the validity of any transactions or agreements entered into by the banks with their customers.

📚 Test Your Knowledge:

Alongside Karnataka Gramin Bank, which bank was recently penalized by the RBI for violating norms related to lending to its own directors?

Correct Answer: SCDCC Bank

🚀 Quick Recap:

About RBI

  • Governor : Sanjay Malhotra
  • Headquarter : Mumbai