The Reserve Bank of India (RBI) has imposed monetary penalties on 5 co-operative banks for violations of banking regulations and non-compliance with various regulatory directions. The penalties, announced on July 13, 2026, relate to deficiencies in areas including Know Your Customer (KYC) compliance, governance standards, lending practices, and the transfer of unclaimed deposits.
RBI clarified that the penalties are based on compliance deficiencies and do not question the validity of transactions or agreements entered by the banks with their customers.
The central bank-imposed penalties on the following co-operative banks:
Co-operative Bank | State | RBI Monetary Penalty |
The Chikhli Urban Co-operative Bank Limited | Maharashtra | ₹13 lakh |
Surat People's Co-operative Bank Limited | Gujarat | ₹13.30 lakh |
Ashok Sahakari Bank Limited | Maharashtra | ₹10 lakh |
The Sambalpur District Co-operative Central Bank Limited | Odisha | ₹8 lakh |
The Nawada Central Co-operative Bank Limited | Bihar | ₹50,000 |
The penalties were imposed for different regulatory violations identified during supervisory inspections.
The Chikhli Urban Co-operative Bank Limited: Failed to transfer eligible unclaimed deposits to the Depositor Education and Awareness Fund (DEAF) within the prescribed timeline, sanctioned loans to builders for land acquisition, and did not implement robust software to identify and report suspicious transactions.
Surat People's Co-operative Bank Limited: Certain directors participated in board meetings where proposals in which they had a direct or indirect interest were discussed and approved, violating RBI's governance norms for urban co-operative banks.
Ashok Sahakari Bank Limited: Sanctioned a loan to one of its directors, contrary to the provisions of the Banking Regulation Act, 1949.
The Sambalpur District Co-operative Central Bank Limited: Failed to transfer eligible unclaimed deposits to the DEAF and did not establish a system for periodic review of customers' risk categorisation under KYC norms.
The Nawada Central Co-operative Bank Limited: Failed to upload customers' KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeline.
RBI stated that the monetary penalties were imposed after considering the banks' replies to show-cause notices, additional submissions, and, where applicable, oral submissions during personal hearings.
The central bank also clarified that the penalties are intended to address regulatory non-compliance and are not meant to pronounce the validity of any transaction or agreement entered by the banks with their customers.
RBI has imposed monetary penalties on 5 co-operative banks for violations related to KYC compliance, governance standards, lending practices and statutory requirements. The regulatory action highlights the central bank's continued focus on strengthening compliance and governance across the co-operative banking sector.
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Published on: Jul 14, 2026, 11:45 AM IST
Rakesh Deshmukh
Rakesh Deshmukh is a financial content specialist with around 3 years of experience writing impactful content across equities, mutual funds, IPOs, and personal finance. At Angel One, he decodes real-time market trends and breaking news, helping investors and traders stay updated. He also helps investors make informed decisions by simplifying market fundamentals and technical analysis. He holds a bachelor’s degree in commerce.
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