RBI Imposes Rs 10.10 Lakh Penalty on City Union Bank for Violations

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.10.10 lakh on City Union Bank Limited for non-compliance with regulatory directions relating to priority sector lending and reporting of Self Help Group (SHG) member data to Credit Information Companies (CICs).

The penalty was imposed through an order dated May 20, 2026, in exercise of powers under the Banking Regulation Act, 1949 and the Credit Information Companies (Regulation) Act, 2005. The action followed the Statutory Inspection for Supervisory Evaluation (ISE 2025) conducted by RBI with reference to the bank’s financial position as of March 31, 2025.

According to the RBI, supervisory findings revealed certain regulatory breaches, following which a show-cause notice was issued to the bank asking why a penalty should not be imposed for violation of RBI directions. After considering the bank’s written reply and oral submissions made during the personal hearing, RBI concluded that the charges were sustained.

The RBI found that the bank had levied loan-related charges on certain agriculture priority sector loans up to Rs 25,000, contrary to regulatory directions. It was also observed that the bank failed to report SHG member-level data to Credit Information Companies.

“The action is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.”

RBI further clarified that the monetary penalty is without prejudice to any other action that may be initiated against the bank for the said violations.

The press release was issued by Brij Raj, Chief General Manager, under Press Release No. 2026-2027/315.

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