The Women's Co-operative Bank was fined ₹5 lakh by the RBI for regulatory violations

Traders Union
All News
Central Banks News
Penalty imposed by RBI on Mahila Co-operative Bank

Highlights

RBI imposed a fine of Rs 5 lakh on the Mahila Co-operative Bank for violating the guidelines related to granting loans to directors and their relatives.
This action was taken under Sections 47A(1)(c), 46(4)(i), and 56 following RBI’s statutory inspection up to March 31, 2025, and the response to the show cause notice.
RBI clarified that this penalty is solely a matter of regulatory compliance and that the possibility of further punitive action remains in the future.

This article was translated from the original. Read the original version by our correspondent here.

Reason for Penalty and Regulatory Basis

According to the press release from RBI dated June 11, 2026, this penalty was imposed for the bank’s failure to comply with instructions regarding ‘loans and advances to directors, their relatives, and firms or concerns in which they are interested’. The central bank stated that the bank had sanctioned director-related loans, leading to this action under Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949.

RBI conducted a statutory inspection of the bank with reference to its financial position as of March 31, 2025. Based on supervisory findings and related correspondence, a show cause notice was issued to the bank, asking why a penalty should not be imposed for non-compliance with the directions.

After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI concluded that the charges against the bank were substantiated. Accordingly, it was deemed appropriate to impose a monetary penalty.

Impact on the Banking Sector and Further Action

The central bank clarified that this action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement between the bank and its customers. RBI also stated that this penalty does not preclude any other action that may be initiated in the future.

This step signals to the cooperative banking sector that compliance with RBI’s directions regarding loans to related parties remains a key area of supervisory focus. The risk of punitive action in such cases is not limited to financial costs but also increases pressure on governance, compliance, and internal control systems.

Our previous report discussed steps taken by the government and RBI to boost foreign capital inflows, including tax relief on government bonds for FPIs, expansion of the Fully Accessible Route, and liquidity measures such as FCNR(B) deposits and forex swaps. The article noted that these steps aim to support banks’ funding positions amid pressure on the rupee and balance of payments challenges, though experts believe the solution may remain partial.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.