The Reserve Bank of India (RBI) has intensified its regulatory oversight on the banking sector by penalizing four co-operative banks across the country for violating key operational and statutory guidelines. Following thorough financial inspections based on the banks’ positions as of March 31, 2025, the central bank exposed serious regulatory lapses and slapped hefty monetary fines along with stern warnings to enforce compliance.
Among the penalized institutions, Hutatma Sahkari Bank Ltd in Walwa, Maharashtra, faced the highest penalty of ₹5 lakh for illegally sanctioning loans to a relative of one of its directors. Following closely, Sultanpur Jilla Sahkari Bank Ltd in Uttar Pradesh was fined ₹3 lakh due to multiple compounding failures, including a severely weak KYC monitoring system, negligence in reporting suspicious transactions, failure to submit borrower data to credit information companies, and delays in transferring eligible unclaimed deposits to the Depositor Education and Awareness Fund.
The remaining two institutions, Chittoor District Co-operative Central Bank Ltd in Andhra Pradesh and The Shimoga District Co-operative Bank in Karnataka, were hit with a penalty of ₹1 lakh each. The RBI reported that both banks violated the Banking Regulation Act by approving and renewing loans to individuals associated with their own directors. Reassuring the public, the RBI emphasized that these penalties are strictly a matter of regulatory compliance and will have absolutely no impact on regular customers, ensuring that all daily banking transactions continue completely uninterrupted.
