What changed
RBI, via an order dated June 15, 2026, penalized the bank ₹1 lakh for contravening statutory provisions. The action followed a NABARD inspection referencing the bank’s financial position as on March 31, 2025; RBI’s supervisory findings concluded the bank had sanctioned director‑related loans.
What it means for you
Banks must strictly avoid lending to directors to comply with Section 20 of the BR Act. This penalty underscores RBI's zero-tolerance for such contraventions, even for co-operative banks. Lenders should review their loan sanction processes to prevent director-related exposures.
What you must do
- Review all loan sanctions to ensure no director-related advances are made.
- Strengthen internal audit checks for compliance with Section 20 of the BR Act.
- Train credit officers on statutory restrictions regarding director loans.
- Ensure board-level oversight of loan sanction policies.
Who it affects
The Chittoor District Co‑operative Central Bank Ltd.
What specific violation led to the penalty?
The bank sanctioned loans to its directors, which contravenes Section 20 read with Section 56 of the Banking Regulation Act, 1949.
What was the penalty amount and when was it imposed?
RBI imposed a monetary penalty of ₹1 lakh on June 15, 2026.