The Reserve Bank of India has cracked down on compliance lapses in the cooperative banking space, imposing penalties on two urban co-operative banks for regulatory violations.
Mumbai-based Mogaveera Co-operative Bank Ltd. has been fined Rs 20,000 for breaching capital adequacy norms. RBI found that the bank refunded share capital multiple times despite its Capital to Risk Weighted Assets Ratio (CRAR) falling below the prescribed minimum, raising concerns over financial discipline.
In a separate action, Pandharpur Urban Co-operative Bank Ltd. has been penalized Rs 2 lakh for violating asset classification norms. The bank had extended fresh credit facilities to certain borrowers to help them repay existing non-performing assets (NPAs), effectively masking stress in its loan book.
Both penalties, issued under provisions of the Banking Regulation Act, 1949, follow RBI inspections based on the banks’ financial positions as of March 31, 2025.
The central bank clarified that the actions stem from compliance deficiencies and do not question customer transactions, but signal stricter oversight of cooperative banks.