The Reserve Bank of India (RBI) has imposed monetary penalties on four co-operative banks for violating banking regulations and failing to follow RBI directions. These penalties were imposed after inspections found several compliance-related issues. RBI clarified that these actions are based only on regulatory deficiencies and do not affect the validity of any transactions between the banks and their customers. RBI may also take further action if required.
The Citizen Co-operative Bank, Bangalore Fined ₹50,000
RBI imposed a penalty of ₹50,000 on The Citizen Co-operative Bank Limited, Bangalore, Karnataka, through an order dated July 17, 2026. The action was taken after an RBI inspection of the bank’s financial position as of March 31, 2025.
During the inspection, RBI found that the bank had failed to classify certain loan accounts as Non-Performing Assets (NPAs), which was a violation of RBI’s guidelines on income recognition, asset classification, and provisioning for urban co-operative banks. After reviewing the bank’s reply and hearing its explanation, RBI decided to impose the penalty.
Raigad District Central Co-operative Bank Fined ₹10.10 Lakh
RBI imposed a penalty of ₹10.10 lakh on Raigad District Central Co-operative Bank Ltd., Maharashtra, through an order dated July 23, 2026. The action followed a statutory inspection conducted by NABARD based on the bank’s financial position as of March 31, 2025.
The inspection found that the bank had sanctioned a loan related to one of its directors, which violated the Banking Regulation Act. It also failed to report borrowers’ credit information to all Credit Information Companies (CICs), as required by RBI guidelines. After considering the bank’s response, RBI concluded that the violations were established and imposed the penalty.
Sangli District Central Co-operative Bank Fined ₹7 Lakh
RBI also imposed a penalty of ₹7 lakh on Sangli District Central Co-operative Bank Ltd., Maharashtra, through an order dated July 23, 2026. The penalty was based on findings from a NABARD inspection conducted with reference to the bank’s financial position as of March 31, 2025.
According to RBI, the bank had sanctioned loans related to its directors, which was a violation of the Banking Regulation Act. After reviewing the bank’s reply and hearing its submissions, RBI imposed the monetary penalty.
Jilla Sahakari Kendriya Bank, Shajapur Fined ₹1 Lakh
RBI imposed a penalty of ₹1 lakh on Jilla Sahakari Kendriya Bank Maryadit, Shajapur, Madhya Pradesh, through an order dated July 21, 2026. The penalty followed a NABARD inspection of the bank’s financial position as of March 31, 2025.
The inspection found that the bank had failed to transfer eligible unclaimed deposits to the Depositor Education and Awareness Fund (DEAF) within the prescribed time limit, which violated the Banking Regulation Act. After considering the bank’s explanation, RBI decided to impose the penalty.
RBI Clarifies Purpose of the Penalties
RBI stated that these penalties are meant to address failures in statutory and regulatory compliance. The penalties do not question the validity of any agreements or transactions between the banks and their customers. RBI also clarified that these actions do not prevent it from taking any additional regulatory action against the concerned banks in the future.
