RBI imposes penalty on Mahila Co-operative Bank and Restrictions on Valsad Mahila Nagrik Sahakari Bank
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹5 lakh (Rupees Five Lakh only) on Mahila Co-operative Bank Ltd., Bangalore, Karnataka (the bank) as the bank had sanctioned loans to people related to its directors.
RBI has strict rules that prohibit banks from giving loans to:
- Their own directors
- Relatives of directors
- Firms or companies in which directors have a significant interest or control
These restrictions are meant to prevent conflicts of interest and ensure that directors do not misuse their position to obtain loans for themselves or their associated businesses.
Restrictions Extended on Valsad Mahila Nagrik Sahakari Bank
The Reserve Bank of India has extended the restrictions on The Valsad Mahila Nagrik Sahakari Bank Ltd., Valsad, Gujarat for a further period of three months from close of business on June 18, 2026, to close of business on September 18, 2026, subject to review.
The Reserve Bank of India (RBI) placed The Valsad Mahila Nagrik Sahakari Bank Ltd. (Valsad, Gujarat) under strict regulatory “Directions” due to its poor financial position and liquidity stress.
Without prior written approval from the RBI, the bank is prohibited from the following:
- Accepting fresh deposits
- Granting or renewing any loans and advances
- Making any investments
- Disbursing payments or incurring liabilities
- Selling or transferring any assets
Impact on Customers
- Withdrawals Barred: Customers are not permitted to withdraw money from their savings, current, or other deposit accounts.
- DICGC Protection: Eligible depositors are entitled to receive their deposit insurance claim amount up to ₹5 lakh through the Deposit Insurance and Credit Guarantee Corporation (DICGC).
