RBI Imposes ₹80,000 Fine on Walchandnagar Sahakari Bank and Pallikonda Cooperative Urban Bank

Moneylife Digital Team 13 March 2026

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of ₹80,000 on two cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of ₹50,000 has been imposed on Maharashtra-based Walchandnagar Sahakari Bank Ltd.

Pallikonda Cooperative Urban Bank Ltd from Tamil Nadu was penalised ₹30,000.

Walchandnagar Sahakari Bank has been penalised for non-compliance with certain directions issued by RBI regarding the know-your-customer (KYC) norms.

During its statutory inspection, the RBI found that Walchandnagar Sahakari Bank had failed to put in place an effective system for the periodic review of the risk categorisation of accounts. As per RBI guidelines, such reviews must be conducted at least once every six months.

Pallikonda Cooperative Urban Bank has been fined for non-compliance with directions issued by RBI regarding prudential norms on capital adequacy for primary urban cooperative banks (UCBs), as well as exposure norms and statutory or other restrictions applicable to UCBs.

During the statutory inspection of Pallikonda Cooperative Urban Bank, RBI found several irregularities. The lender had allowed the refund of share capital to its members even though its capital-to-risk (weighted) assets ratio (CRAR) was below the regulatory minimum.

The inspection also revealed that the Pallikonda Cooperative Urban Bank sanctioned certain loans without complying with the share-linking-to-borrowings norm, despite its CRAR remaining below the prescribed regulatory minimum. In addition, the lender had sanctioned loans to certain nominal members in excess of the prescribed regulatory limit.

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

In both 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 into with their customer.

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