The Reserve Bank of India (RBI) has imposed monetary penalties on five co-operative banks for violating banking rules and failing to follow RBI regulations. The penalties were imposed after inspections found deficiencies in areas such as Know Your Customer (KYC), housing finance, governance, and compliance with the Banking Regulation Act. RBI clarified that these penalties are only for regulatory violations and do not affect the validity of any transactions between the banks and their customers.
₹13 Lakh Penalty on The Chikhli Urban Co-operative Bank
RBI has imposed a penalty of ₹13 lakh on The Chikhli Urban Co-operative Bank Limited, Chikhli, Maharashtra, through an order dated July 8, 2026.
During an inspection based on the bank’s financial position as of March 31, 2025, RBI found several violations. The bank failed to transfer eligible unclaimed deposits to the Depositor Education and Awareness Fund within the prescribed time. It also sanctioned loans to builders and contractors for land acquisition, which violated RBI’s housing finance guidelines. In addition, the bank did not have a proper software system to identify and report suspicious financial transactions as required under KYC norms.
₹50,000 Penalty on The Nawada Central Co-operative Bank
RBI has imposed a penalty of ₹50,000 on The Nawada Central Co-operative Bank Limited, Bihar, through an order dated July 2, 2026.
The inspection was conducted by NABARD based on the bank’s financial position as of March 31, 2025. RBI found that the bank failed to upload customers’ KYC records to the Central KYC Records Registry (CKYCR) within the prescribed time limit, resulting in regulatory non-compliance.
₹8 Lakh Penalty on The Sambalpur District Co-operative Central Bank
RBI has imposed a penalty of ₹8 lakh on The Sambalpur District Co-operative Central Bank Limited, Odisha, through an order dated July 2, 2026.
The inspection by NABARD found that the bank failed to transfer eligible unclaimed deposits to the Depositor Education and Awareness Fund within the required period. It also did not carry out regular reviews of customers’ risk categorisation, which is an important requirement under RBI’s KYC guidelines.
₹10 Lakh Penalty on Ashok Sahakari Bank
RBI has imposed a penalty of ₹10 lakh on Ashok Sahakari Bank Ltd., Ahmednagar, Maharashtra, through an order dated June 29, 2026.
During the inspection, RBI found that the bank had sanctioned a loan to one of its directors. This was a violation of Section 20(1) of the Banking Regulation Act, 1949, which restricts banks from granting loans to their own directors.
₹13.30 Lakh Penalty on Surat People’s Co-operative Bank
RBI has imposed a penalty of ₹13.30 lakh on Surat People’s Co-operative Bank Ltd., Surat, through an order dated July 10, 2026.
The inspection revealed that some directors participated in board meetings where proposals in which they had direct or indirect interests were discussed and approved. This violated RBI’s governance guidelines for Urban Co-operative Banks regarding the functioning of the Board of Directors.
RBI Clarifies Purpose of the Penalties
RBI stated that these penalties have been imposed because of deficiencies in statutory and regulatory compliance. The action does not question the validity of any transactions or agreements made by these banks with their customers. RBI also said that it may take additional action against these banks if required under the law.
