In its June 2025 issue of the Financial Stability Report (FSR), the Reserve Bank of India highlighted that between December 2024 and May 2025, it undertook enforcement actions against 177 regulated entities (REs) for violations of statutory provisions and non-compliance with its directives, including 118 cooperative banks.
A cumulative penalty of Rs 29.15 crore was imposed during this period. Cooperative banks emerged as the most penalized category, with 118 institutions facing enforcement action, underscoring ongoing regulatory and compliance concerns within the cooperative banking sector.
The remaining penalized entities included 10 public sector banks, 12 private sector banks, 22 NBFCs, and others including small finance banks (SFBs), foreign banks, and regional rural banks (RRBs).
During the financial year 2024–25, the RBI imposed a staggering 264 penalties on cooperative banks, far surpassing all other categories of regulated entities. The total penalty amount levied on cooperative banks during the fiscal stood at Rs 15.63 crore.
However, since there are over 1,800 cooperative banks in the country, including urban cooperative banks, state cooperative bank and district central cooperative banks, the enforcement actions point to problems in only a small section of the sector, showing that most cooperative banks are still following the rules properly.
Is it because of the unrealistic norms or because of the issues with the managements needs a deeper examination.
Wish someone undertakes this study and suggest solutions, otherwise, so many instances of violations do not reflect well on the system!
Sooner the better.🙏🙏🙏
118 cooperative being imposed 264 penalties during the year is not really a staggering number when we see that these are out of 1462 UCBs plus around 360 st.coop.banks and DCCBs in the Country
The co op sector particularly the urban banks functioning had been under lens and found to be obstinate and controversial ,the reasons being their control by politicians from different ideologies.For nearly 50 yrs since 1947 ,the control vested with one dominant party leaders directly or indirectly,it was in 21st century that right lobby started infiltration in co op sector looking at the verocity and complicity of the sector in gaining political power in states and centre.But unfortunately during the entire period the leadership of co op banks mainly urban got vested with the handpicked or selective persons.These elements are by nature violators ,the main reason of such violations is management by untrained and unskilled staff recruited due to nepotism.corruption and favourtism by regulators.
Now the pinch is felt due to co op sector entering in to new Era of reforms and regulation.
I personally find that the basics of accounting wherein Provision for Bad and Doubtful Debts A/c is not maintained and therefore RBI came with one time solution to transfer BDDR to general reserve and requisite provision to current liabilities and provisions.
Every week training can help juniors learn fast and keep all the infra together in robust conditions