RBI Imposes Rs3.50 Lakh Penalty on 2 Cooperative Banks for Regulatory Violations
Moneylife Digital Team 29 July 2025
Reserve Bank of India (RBI) has imposed a penalty of Rs3.50 lakh on two cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs2.50 lakh has been imposed on Madhya Pradesh (MP)-based Smriti Nagrik Sahakari Bank Maryadit.
 
Batlagundu Cooperative Urban Bank Ltd from Tamil Nadu was fined Rs1 lakh.
 
Smriti Nagrik Sahakari Bank has been penalised for failing to comply with RBI directions related to the comprehensive cyber security framework for primary urban cooperative banks (UCBs) under the graded approach, as well as know-your-customer (KYC) norms.
 
RBI statutory inspection found that Smriti Nagrik Sahakari Bank had failed to implement certain cybersecurity controls as mandated under RBI's comprehensive framework. Additionally, the lender did not update the KYC details of some customers within the prescribed timelines.
 
Batlagundu Cooperative Urban Bank has been fined for failing to comply with RBI directions related to prudential norms on capital adequacy for primary UCBs, as well as specific instructions issued under the supervisory action framework (SAF). 
 
RBI found that Batlagundu Cooperative Urban Bank had sanctioned certain loans without adhering to the share linking to borrowings norm, even though its capital to risk-weighted assets ratio (CRAR) was below the regulatory minimum. The lender also sanctioned fresh loans and advances with a risk weight of over 100% and, in some cases, exceeded the single borrower exposure limit for such loans. These actions were in violation of the directions issued SAF.
 
"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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