In a major relief for the cooperative banking sector, the number of penalties imposed by the Reserve Bank of India (RBI) on cooperative banks witnessed a sharp decline during FY2025-26, indicating improved compliance and governance standards across the sector.
According to the RBI’s latest Annual Report, cooperative banks faced 172 penalties amounting to Rs 4.12 crore during FY2025-26. Though the segment still accounted for the highest number of enforcement actions among regulated entities, this was largely due to the large number of cooperative banks operating across the country.
In FY2024-25, the RBI had imposed a staggering 264 penalties on cooperative banks aggregating Rs 15.63 crore. The latest data therefore shows a reduction of 92 penalty cases year-on-year, while the total penalty amount plunged by nearly Rs 11.5 crore, a massive decline of over 73%.
The sharp fall assumes significance as cooperative banks had emerged as the most penalised banking segment last year, triggering concerns over governance, compliance gaps and regulatory adherence within the sector.
The RBI’s Annual Report stated that during FY2025-26, the central bank imposed 241 penalties totaling Rs 26.33 crore across various regulated entities for violations of statutory provisions and regulatory directions.
Compared to cooperative banks, public sector banks faced 13 penalties totaling Rs 9.05 crore, while private sector banks recorded 14 penalties amounting to Rs 7.93 crore during FY2025-26.
The latest figures are being seen as a positive sign for the cooperative banking sector, suggesting that many cooperative banks have strengthened their compliance and internal governance mechanisms under tighter RBI supervision.