The Reserve Bank of India (RBI) has imposed monetary penalties on three co-operative banks in Karnataka for violating or failing to follow certain banking rules and regulatory directions. The penalties were imposed through separate orders dated August 20, 2026.
Vikas Souharda Co-operative Bank Fined ₹1 Lakh
The RBI has imposed a penalty of ₹1 lakh on Vikas Souharda Co-operative Bank Limited, Hosapete, Karnataka.
The penalty was imposed because the bank failed to follow RBI directions related to income recognition, asset classification, provisioning and other related matters for Urban Co-operative Banks (UCBs).
During its inspection of the bank’s financial position as of March 31, 2025, the RBI found that the bank had not classified certain loan accounts as Non-Performing Assets (NPAs).
Pragathi Co-operative Bank Fined ₹2 Lakh
The RBI has also imposed a penalty of ₹2 lakh on The Pragathi Co-operative Bank Limited, Karnataka. The bank was found to have violated Section 20 read with Section 56 of the Banking Regulation Act, 1949, along with certain RBI directions related to loans to directors and their relatives, exposure limits and investment portfolio rules for Urban Co-operative Banks.
The RBI inspection was based on the bank’s financial position as of March 31, 2025. After examining the bank’s response and hearing its submissions, the RBI found several violations. The bank had sanctioned loans related to directors, exceeded the prescribed single borrower exposure limit, and breached the prudential inter-bank gross exposure limit and inter-bank counter-party limit.
Shri Vijay Mahantesh Co-operative Bank Fined ₹2.50 Lakh
The RBI has imposed a penalty of ₹2.50 lakh on Shri Vijay Mahantesh Co-operative Bank Limited, Hungund, Karnataka.
The penalty relates to non-compliance with RBI directions on income recognition, asset classification, provisioning and other related matters, as well as rules concerning loans to directors, their relatives and firms or concerns in which they are interested.
During the inspection based on the bank’s financial position as of March 31, 2025, the RBI found that certain loan accounts had not been classified as NPAs. The bank had also sanctioned loans related to directors.
After considering the bank’s reply and submissions made during the personal hearing, the RBI found these charges to be established and imposed the monetary penalty.
