RBI imposed ₹10.10 lakh penalty on City Union Bank following statutory inspection as of March 31, 2025. Bank violated two compliance norms: levying charges on agriculture priority sector loans up to ₹25,000 and failing to report Self Help Group member data to Credit Information Companies. Bank received speaking order on May 22, 2026, dated May 20, 2026. Penalty disclosed under SEBI Regulation 30. Bank confirmed no material operational impact beyond monetary penalty amount.

This penalty reflects RBI's heightened scrutiny of priority sector lending compliance, particularly agriculture loans and financial inclusion reporting. The ₹25,000 threshold for agriculture loans is significant as it covers small farmer loans that should be accessible without additional charges. The SHG data reporting failure impacts credit bureau records, affecting rural women's credit histories. The penalty timing coincides with Kotak Mahindra Bank acquiring 9.99% stake in City Union Bank, potentially signaling RBI's focus on governance standards before ownership changes. The dual violation pattern—charging vulnerable borrowers while under-reporting inclusion data—indicates systemic compliance gaps rather than isolated errors. For RBI Grade B candidates, this case exemplifies supervisory evaluation mechanisms, penalty calculation methods, and disclosure requirements. The speaking order format ensures banks understand specific violations and can appeal. The SEBI Regulation 30 disclosure requirement demonstrates inter-regulatory coordination. Such penalties, while individually small, aggregate into regulatory risk assessments that influence bank ratings, capital adequacy evaluations, and future business approvals.