RBI Imposes ₹5.50 Lakh Penalty on 3 Cooperative Banks

Moneylife Digital Team 25 November 2025

Investor Interest

Reserve Bank of India (RBI) has imposed a total penalty of ₹5.50 lakh on three cooperative banks for non-compliance with its regulatory directions. The highest penalty has been imposed on Uttar Pradesh-based Fatehpur District Cooperative Bank Ltd.

Other banks penalised by RBI are: Tumkur Grain Merchants Cooperative Bank Ltd from Karnataka and two district cooperative central (DCC) banks from Andhra Pradesh.

Fatehpur District Cooperative Bank has been penalised for non-compliance with certain directions issued by RBI on know-your-customer (KYC).

RBI’s statutory inspection found that the Fatehpur District Cooperative Bank had failed to put in place a system for periodic review of risk categorisation of customer accounts required at least once every six months and the lender also failed to periodically update customers’ KYC details.

In Andhra Pradesh, the DCC banks of Kurnool and Kakinada were fined ₹1.50 lakh and ₹1 lakh, respectively, for violating provisions of Section 20 read with Section 56 of the Banking Regulation Act, 1949. RBI found that the Kurnool DCC Bank had sanctioned loans to its directors and failed to upload customer KYC records to the Central KYC Records Registry (CKYCR) within the required timeframe. The Kakinada DCC Bank was penalised for sanctioning a loan to one of its directors.

Tumkur Grain Merchants Cooperative Bank has been fined ₹1 lakh for failing to comply with specific directions issued by the RBI under the supervisory action framework (SAF). RBI found that the lender had sanctioned fresh loans and advances carrying a risk weight of more than 100%, offered interest rates on fixed deposits higher than those offered by the State Bank of India (SBI) and sanctioned or renewed credit facilities to sectors with high levels of non-performing assets (NPAs) or defaults.

The central bank says, "After considering the reply and oral submissions of all banks during the personal hearing, RBI concluded that the charges of non-compliance with RBI directions were substantiated and warranted imposition of a monetary penalty."

In all the cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced on the validity of any transaction or agreement they entered with their customers.

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