4 Coop Banks, 1 RRB Penalized: Fine Rs13.70 Lakh

These actions are based on deficiencies in regulatory compliance

FinTech BizNews Service 

Mumbai, August 14, 2025: The Reserve Bank of India (RBl) has, imposed a monetary penalty on 4 co-operative banks and one RRB.

The Reserve Bank of India (RBl) has, imposed a monetary penalty of Rs2.50 lakh (Rupees Two Lakh Fifty Thousand only) on Shree Bharat Co-operative Bank Ltd., Vadodara, Gujarat;  Rs1 lakh (Rupees One Lakh only) on Sardargunj Mercantile Co-operative Bank Limited, Patan, Gujarat; Rs5 lakh (Rupees Five Lakh only) on Sarvodaya Commercial Cooperative Bank Ltd., Dist. Mehsana, Gujarat; Rs1 lakh (Rupees One lakh only) on The Uma Co-operative Bank Ltd., Vadodara, Gujarat and Rs 4.20 lakh (Rupees Four Lakh Twenty Thousand only) on Maharashtra Gramin Bank, Aurangabad.

1 The Reserve Bank of India (RBl) has, by an order dated August 08, 2025, imposed a monetary penalty of Rs2.50 lakh (Rupees Two Lakh Fifty Thousand only) on Shree Bharat Co-operative Bank Ltd., Vadodara, Gujarat (the bank) for non-compliance with certain directions issued by RBI on ‘Inspection & Audit Systems in Primary (Urban) Co- operative Banks’, ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’, and ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The statutory inspection of the bank was conducted by the RBI with reference to its financial position as on March 31, 2024. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank's reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty:

The bank had failed to:

1. put in place a system of Internal Audit;
2.  put in place a system to identify Non-Performing Assets (NPAs) on an ongoing basis and classify certain loans and advances as NPAs; and
3.  carry out periodic review of risk categorisation of certain accounts, with such periodicity being at least once in six months.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

2 The Reserve Bank of India (RBl) has, by an order dated August 08, 2025, imposed a monetary penalty of Rs1 lakh (Rupees One Lakh only) on Sardargunj Mercantile Co-operative Bank Limited, Patan, Gujarat (the bank) for non-compliance with certain directions issued by RBI on ‘Co-operative Banks - Interest Rate on Deposits’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The statutory inspection of the bank was conducted by the RBI with reference to its financial position as on March 31, 2024. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charge against the bank was sustained, warranting imposition of monetary penalty:

The bank had accepted certain interest-free deposits in accounts other than current account.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

3 The Reserve Bank of India (RBl) has, by an order dated August 08, 2025, imposed a monetary penalty of Rs5 lakh (Rupees Five Lakh only) on Sarvodaya Commercial Cooperative Bank Ltd., Dist. Mehsana, Gujarat (the bank) for non-compliance with certain directions issued by RBI on ‘Donations / Contributions for public / charitable purposes out of profits of UCBs’, ‘Financial Statements – Presentation and Disclosures’, ‘Inspection & Audit Systems in Primary (Urban) Co- operative Banks’, ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’, and ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The statutory inspection of the bank was conducted by the RBI with reference to its financial position as on March 31, 2024. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty:

The bank had:

1. made donations to trusts in excess of prescribed regulatory ceiling;
2. failed to present the true and fair picture of its profits and assets in profit and loss statement and balance sheet respectively;
3. conducted concurrent audit monthly instead of conducting simultaneous check of the transactions and reports were submitted with delays;
4. failed to categorise certain Non-Performing Assets (NPAs) in the appropriate NPA sub-category; and
5. failed to carry out periodic review of risk categorisation of accounts with such periodicity being at least once in six months.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

4 The Reserve Bank of India (RBl) has, by an order dated August 08, 2025, imposed a monetary penalty of Rs1 lakh (Rupees One lakh only) on The Uma Co-operative Bank Ltd., Vadodara, Gujarat (the bank) for non-compliance with certain directions issued by RBI on ‘Inspection & Audit Systems in Primary (Urban) Co-operative Banks’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The statutory inspection of the bank was conducted by the RBI with reference to its financial position as on March 31, 2024. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank's reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI found, inter alia, that the following charge against the bank was sustained, warranting imposition of monetary penalty:

The bank had failed to conduct Internal Audit during April 01, 2022 to March 31, 2024.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

5 The Reserve Bank of India (RBI) has, by an order dated August 12, 2025, imposed a monetary penalty of Rs 4.20 lakh (Rupees Four Lakh Twenty Thousand only) on Maharashtra Gramin Bank, Aurangabad (the bank) for non-compliance with certain directions issued by National Bank for Agriculture and Rural Development (NABARD) on ‘Offsite Surveillance System – Revision of Due dates for Submission of OSS/FMS Returns’ and certain directions issued by RBI on ‘Know Your Customer (KYC)’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act.

The statutory inspection of the bank was conducted by NABARD with reference to its financial position as on March 31, 2024. Based on supervisory findings of non-compliance with NABARD and RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty:

The bank had:

1. reported certain frauds to NABARD with delay; and
2. failed to put in place a system of periodic review of risk categorisation of accounts, with such periodicity being at least once in six months.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.