RBI Slaps Rs13 Lakh Penalty on 4 Cooperative Banks from Maharashtra

Moneylife Digital Team 07 May 2025

Investor Interest

Reserve Bank of India (RBI) has imposed a total penalty of Rs13 lakh on four Maharashtra-based cooperative banks for failing to follow directions issued by the banking regulator. The highest penalty of Rs7.50 lakh has been imposed on Pusad Urban Cooperative Bank Ltd.

The other cooperative banks penalised by RBI are: Hindusthan Cooperative Bank Ltd, Deccan Merchants Cooperative Bank Ltd and Siddheshwar Urban Cooperative Bank Maryadit.

Pusad Urban Cooperative Bank has been penalised for not complying with some RBI guidelines. These include income recognition, asset classification, provisioning norms, interest rates on deposits for cooperative banks and specific instructions issued under the supervisory action framework (SAF).

RBI statutory inspection found that Pusad Urban Cooperative Bank had regularised non-performing assets (NPAs) without receiving repayments from genuine sources. It also opened savings accounts in the names of ineligible entities and offered deposit interest rates higher than those offered by the State Bank of India (SBI), violating the directions under SAF.

Hindusthan Cooperative Bank has been fined Rs3 lakh for not complying with RBI guidelines related to maintaining deposit accounts by primary UCBs. The lender had imposed penalty charges on customers for not maintaining the minimum balance in their savings accounts without informing them through SMS, email, letter or any other form of communication.

Mumbai-based Deccan Merchants Cooperative Bank has been fined Rs2 lakh for failing to comply with RBI guidelines on loans and advances to directors, their relatives and firms or businesses in which they have an interest. The Bank had approved loans related to its directors.

Further, Siddheshwar Urban Cooperative Bank Maryadit has been penalised Rs50,000 for non-compliance with directions issued by RBI on placement of deposits with other banks by primary UCBs. The Bank had breached the prudential inter-bank (gross) exposure limit.

The central bank says, "After considering the reply and oral submissions of all 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 four 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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