RBI imposed Penalty on Nagar Sahkari Bank and extended restrictions on Amanath Co-operative Bank
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹14.25 lakh on Nagar Sahkari Bank Ltd., Maharajganj, Uttar Pradesh.
The penalty was imposed as the bank:
- Failed to classify certain loan accounts as Non-Performing Assets (NPAs).
- Incorrectly classified some NPAs.
- Did not continuously identify NPAs as required.
- Exceeded the prescribed regulatory limits for unsecured loans at both individual and overall levels.
- Failed to upload borrower credit information to Credit Information Companies (CICs).
- Did not take adequate precautions to prevent deficiencies in certain loan sanctions.
RBI Extends Restrictions on Amanath Co-operative Bank Till September 12, 2026
The Reserve Bank of India (RBI) has extended the directions imposed on The Amanath Co-operative Bank Ltd., Bangalore, for another three months.
The current extension will remain in force till September 12, 2026, or until further review by the RBI. The Reserve Bank of India (RBI) placed business restrictions (or Directions) on Bengaluru-based Amanath Co-operative Bank citing material supervisory concerns. This regulatory action prevents the bank from conducting normal operations without RBI approval.
Under Section 35A of the Banking Regulation Act, the bank is prohibited from:
- Granting or renewing loans and advances.
- Making any fresh investments.
- Accepting new deposits or borrowing funds.
- Disbursing or agreeing to disburse any payments (except in specific cases outlined by the RBI).
Why RBI impose restrictions on Amanath Co-operative Bank?
- Alarming Non-Performing Assets (NPAs): The bank accumulated an exceptionally high volume of bad loans that borrowers failed to repay, severely draining its liquidity.
- Failure to Recover Dues: The management failed to submit proper recovery reports or show satisfactory progress in recovering funds from large default accounts.
- Past Financial Mismanagement: Official Rajya Sabha Parliamentary Debates highlight historical issues with the bank’s governance, including unauthorized or fraudulent loans being siphoned off, and irregular loan concessions granted to directors or their relatives.
- Precarious Financial Health: The combined weight of bad debts and poor governance meant the bank no longer possessed a safe or stable financial structure to carry out everyday commercial banking safely.
