RBI Imposes Over Rs9 Lakh Penalty on 3 Cooperative Banks from Maharashtra, 1 from Karnataka

Moneylife Digital Team 22 July 2025

Economy & Nation

Reserve Bank of India (RBI) has imposed a penalty of Rs9.20 lakh on three cooperative banks from Maharashtra and one from Karnataka for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs6 lakh has been imposed on Maharashtra-based Motiram Agrawal Jalna Merchants Cooperative Bank Ltd.

Other banks penalised by RBI are: Shahada Peoples Cooperative Bank Ltd and Sahyadri Sahakari Bank Ltd from Maharashtra and Government Employees Cooperative Bank Ltd from Karnataka.

Motiram Agrawal Jalna Merchants Cooperative Bank has been penalised for not complying with certain RBI guidelines related to loans and advances. These guidelines cover loans to directors, their relatives and firms in which they have an interest, as well as limits on exposure to single borrowers, groups of borrowers and large exposures. The directions also include revisions in targets for priority sector lending applicable to Urban Cooperative Banks (UCBs).

RBI's statutory inspection revealed that Motiram Agrawal Jalna Merchants Cooperative Bank had sanctioned director-related loans and loans and advances to certain connected borrowers beyond the applicable group exposure limit.

Shahada Peoples Cooperative Bank has been fined Rs2 lakh for non-compliance with directions issued by RBI on income recognition, asset classification, provisioning and other related matters - UCBs. The lender had regularised certain non-performing accounts (NPAs) without repayment through genuine sources.

RBI conducted a statutory inspection of Government Employees Cooperative Bank to assess its financial position as of 31 March 2024. The inspection revealed that the lender had failed to upload customers know-your-customer (KYC) records to the Central KYC Records Registry (CKYCR) within the prescribed timeline. Additionally, the lender did not implement some cybersecurity controls and requirements as mandated under the RBI’s cyber security framework.

As a result, RBI imposed a penalty of Rs1 lakh on Government Employees Cooperative Bank.

Sahyadri Sahakari Bank, based in Mumbai, Maharashtra, has been fined Rs20,000 for failing to comply with directions issued by RBI under the supervisory action framework (SAF). The lender did not reduce the single borrower exposure limit for fresh loans and advances by 50% of the applicable regulatory limit, as required under the SAF guidelines.

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

In all four 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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