RBI Imposes Monetary Penalty on Karnataka Gramin Bank for Non-Compliance

Mumbai, March 28, 2025 – The Reserve Bank of India (RBI) has levied a monetary penalty of ₹1.00 lakh (Rupees One Lakh only) on Karnataka Gramin Bank, Karnataka, for failing to comply with regulatory directions. The penalty was imposed through an order dated March 26, 2025, under the provisions of the Banking Regulation Act, 1949.

Background of the Penalty

The penalty stems from non-compliance with RBI’s directives on ‘Strengthening of Prudential Norms- Provisioning Asset Classification and Exposure Limit, 2001,’ read with ‘Income Recognition, Asset Classification and Provisioning Norms-Guidelines, 1996.’ The statutory inspection of the bank was conducted by the National Bank for Agriculture and Rural Development (NABARD) as of March 31, 2024. The inspection revealed supervisory findings of non-compliance, prompting RBI to issue a show-cause notice to the bank.

Key Findings

After reviewing the bank’s written reply and oral submissions during a personal hearing, RBI concluded that Karnataka Gramin Bank had failed to classify certain loan accounts as non-performing assets (NPAs). This lapse in adhering to prudential norms warranted the imposition of the monetary penalty.

RBI’s Stance

The RBI clarified that this action is based solely on regulatory compliance deficiencies and does not question the validity of any transactions or agreements between the bank and its customers. Additionally, the penalty is without prejudice to any further actions that RBI may initiate against the bank.

Conclusion

This penalty underscores RBI’s commitment to enforcing strict adherence to banking regulations to maintain the stability and integrity of the financial system. Karnataka Gramin Bank is expected to address the identified shortcomings promptly to avoid further regulatory actions.

For further details, refer to the RBI’s official press release (No. 2024-2025/2516) dated March 28, 2025.

Issued by:
Puneet Pancholy
Chief General Manager
Reserve Bank of India

Contact:
Email: helpdoc@rbi.org.in
Website: www.rbi.org.in

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This article is based on the RBI press release and is intended for informational purposes only.