RBI Fines Three Cooperative Banks ₹5 Lakh for KYC, Exposure Norm and CRAR Lapses
Moneylife Digital Team 26 June 2026
Reserve Bank of India (RBI) has imposed penalties totalling ₹5 lakh on three cooperative banks for non-compliance with various regulatory directions issued by the banking regulator. The highest penalty of ₹3 lakh has been imposed on Nabapalli Cooperative Bank Ltd in West Bengal.
 
The other banks penalised by RBI are: Maharashtra-based Modern Cooperative Bank Ltd and Tamil Nadu-based Lalgudi Cooperative Urban Bank Ltd.
 
Nabapalli Cooperative Bank has been penalised for failing to comply with RBI directions on know-your-customer (KYC) norms.
 
The statutory inspection of Nabapalli Cooperative Bank, which was conducted by RBI with reference to its financial position as on 31 March 2025, revealed that the lender had failed to upload the KYC records of customers onto the Central KYC Records Registry (CKYCR) within the prescribed timeline.
 
Modern Cooperative Bank has been fined ₹1 lakh by RBI for violating regulatory directions on exposure norms, statutory and other restrictions applicable to urban cooperative banks (UCBs), and KYC guidelines.
 
During its inspection of Modern Cooperative Bank, RBI found that the lender had breached the prescribed regulatory limit for exposure to a single borrower. It also failed to upload customers’ KYC records to the CKYCR within the stipulated timeframe.
 
RBI also conducted a statutory inspection of Lalgudi Cooperative Urban Bank. The inspection found that, despite its capital-to-risk-weighted assets ratio (CRAR) remaining below the regulatory minimum, the lender had refunded share capital to its members. The inspection also revealed that the lender sanctioned certain loans without complying with the prescribed share-linking-to-borrowings norms.
 
As a result, RBI imposed a penalty of ₹1 lakh on Lalgudi Cooperative Urban Bank.
 
In all three cases, RBI clarified that the penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transaction or agreement entered into by banks with their customers.
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