RBI Imposes Rs4 Lakh Penalty on 5 Cooperative Banks
Moneylife Digital Team 09 May 2025
Reserve Bank of India (RBI) has imposed a penalty of Rs4 lakh on five cooperative banks for non-compliance with the directions issued by the banking regulator. The highest penalty of Rs1.50 lakh has been imposed on Nicholson Cooperative Town Bank Ltd from Tamil Nadu.
 
Other banks penalised by RBI are Jammu Central Cooperative Bank Ltd, Vishwakalyan Sahakara Bank Niyamit and Sree Harihareshwara Urban Cooperative Bank Ltd from Karnataka and Shree Warana Sahakari Bank Ltd from Maharashtra.
 
Nicholson Cooperative Town Bank has been penalised for violating RBI guidelines related to loans and advances given to directors, their relatives and associated firms, as well as for non-compliance with know-your-customer (KYC) norms.
 
RBI statutory inspection revealed that Nicholson Cooperative Town Bank had approved loans linked to its directors and failed to upload KYC records of some customers to the Central KYC Records Registry (CKYCR) within the required timeframe.
 
Jammu Central Cooperative Bank has been fined for non-compliance with directions issued by RBI under Section 35A of the Banking Regulation Act, 1949 (BR Act). The lender had accepted fresh deposits in savings bank accounts in violation of specific directions issued by RBI.
 
Additionally, Vishwakalyan Sahakara Bank Niyamit, Sree Harihareshwara Urban Cooperative Bank and Shree Warana Sahakari Bank have each been fined Rs50,000 for violating Section 31 of the BR Act. All three banks failed to submit their statutory returns to RBI within the required timeline.
 
The central bank says, "After considering the reply and oral submissions of all the banks during the personal hearing, RBI concluded that the charges of non-compliance with RBI directions were substantiated and warranted imposition of a monetary penalty."
 
In all five cases, RBI says the penalties are based on deficiencies in regulatory compliance and are not intended to be pronounced upon the validity of any transaction or agreement they entered with their customers.
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