The Reserve Bank of India (RBI) has intensified its supervisory action against cooperative banks, imposing monetary penalties totalling Rs 44.80 lakh on five cooperative banks across Gujarat, Maharashtra, Odisha and Bihar for deficiencies in governance, lending practices, Know Your Customer (KYC) compliance and Depositor Education and Awareness Fund (DEAF) requirements.
The penalties, announced as part of RBI’s ongoing enforcement drive, underline the central bank’s increasing focus on strengthening regulatory compliance and governance standards in the cooperative banking sector.
The highest penalty of Rs 13.30 lakh was imposed on Surat People’s Co-operative Bank Ltd., Gujarat, after RBI found that certain directors participated in Board meetings in which proposals involving their direct or indirect interests were discussed and approved. The action was taken for violating RBI’s governance directions applicable to Urban Cooperative Banks.
Another significant penalty of Rs 13 lakh was imposed on The Chikhli Urban Co-operative Bank Ltd., Maharashtra. RBI found multiple compliance failures, including non-transfer of eligible unclaimed deposits to the Depositor Education and Awareness Fund (DEAF), sanctioning loans to builders and contractors for land acquisition and failure to establish an effective system for identifying and reporting suspicious transactions under KYC norms.
Ashok Sahakari Bank Ltd., Ahmednagar, was fined Rs 10 lakh for sanctioning a loan to one of its directors in violation of the Banking Regulation Act, while Sambalpur District Co-operative Central Bank Ltd., Odisha, was penalised Rs 8 lakh for delays in transferring eligible unclaimed deposits to the DEAF and for failing to periodically review customers’ risk categorisation as required under KYC guidelines.
The Nawada Central Co-operative Bank Ltd., Bihar, received a penalty of Rs 50,000 for not uploading customers’ KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeframe.
RBI clarified that these penalties relate solely to deficiencies in statutory and regulatory compliance and do not affect the validity of transactions entered into by customers. The central bank also stated that the penalties are without prejudice to any further supervisory or regulatory action against the banks.
RBI’s latest action is part of a continuing crackdown on cooperative banks. In recent months, it fined The Nabapalli Cooperative Bank (Rs 3 lakh) for KYC lapses, N.E. & E.C. Railway Employees’ Multi-State Primary Co-operative Bank, Gorakhpur (Rs 1.05 lakh) for DEAF and credit reporting violations, and Nirmal Urban Co-operative Bank, Nagpur (Rs 1 lakh) for breaching Supervisory Action Framework norms and exposure limits.
Earlier, RBI had imposed penalties on Lunawada People’s Co-operative Bank in Gujarat for irregular loans involving directors’ interests, Shree Laxmi Co-operative Bank in Pune and Jalore Central Co-operative Bank in Rajasthan for various regulatory violations.
In March, five cooperative banks, including Tanur Urban Co-operative Bank, Kodagu DCCB, Mysore and Chamarajnagar DCCB, Loknete R.D. Appa Kshirsagar Co-operative Bank and Pali DCCB, were also penalised for lapses relating to KYC compliance, lending norms and regulatory reporting.
The RBI’s latest Financial Stability Report also reflects the regulator’s strict supervisory approach. It revealed that enforcement action was initiated against 56 cooperative banks during the six-month period from December 2025 to May 2026, as part of the action taken against 99 regulated entities.
