RBI Slaps ₹2 Lakh Penalty Each on 3 Cooperative Banks for Compliance Failures

Moneylife Digital Team 28 May 2026

Investor Interest

Reserve Bank of India (RBI) has imposed penalties totalling ₹6 lakh on three cooperative banks for non-compliance with various regulatory directions issued by the banking regulator.

The banks penalised are: Shree Laxmi Cooperative Bank Ltd from Maharashtra, Jalore Central Cooperative Bank Ltd from Rajasthan and Lunawada People’s Cooperative Bank Ltd from Gujarat. Each bank has been fined ₹2 lakh.

Shree Laxmi Cooperative Bank was penalised for non-compliance with certain RBI directions on know-your-customer (KYC) norms, the maintenance of deposit accounts by primary urban cooperative banks (UCBs), and revised instructions on inoperative accounts and unclaimed deposits.

RBI’s statutory inspection found several compliance lapses at Shree Laxmi Cooperative Bank. This included failure to conduct periodic reviews of account risk categorisation at least once every six months and failure to upload customers’ KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeline.

Shree Laxmi Cooperative Bank was also found to have levied penal charges for non-maintenance of minimum balance without informing customers and failed to conduct annual reviews of accounts that had remained without customer-induced transactions for more than one year.

Rajasthan-based Jalore Central Cooperative Bank was fined for non-compliance with KYC directions. A statutory inspection conducted by the National Bank for Agriculture and Rural Development (NABARD) found that the lender had failed to put in place a system for periodic review of risk categorisation of accounts and had not carried out periodic updation of customers’ KYC records within the prescribed timelines.

RBI also conducted a statutory inspection of Lunawada People’s Cooperative Bank and found that the lender had sanctioned loans in cases where relatives of its directors stood as guarantors.

As a result, RBI imposed a penalty of ₹2 lakh on Lunawada People’s Cooperative Bank.

In all three cases, RBI clarified that the penalties were based on deficiencies in regulatory compliance and were not intended to pronounce upon the validity of any transaction or agreement entered into by the banks with their customers.

Comments