RBI imposed a fine of Rs 2.1 lakh on Nashik Road Deolali Vyapari Sahakari Bank for regulatory violations

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RBI's penalty on Nashik Cooperative Bank

Highlights

RBI imposed a fine of Rs 2.1 lakh on Nashik Road Deolali Vyapari Sahakari Bank in its order dated June 12, 2026.
The penalty was imposed for illegally sanctioning loans to relatives of the directors and for deficiencies in regulatory compliance.
RBI clarified that this monetary penalty does not preclude further regulatory action and signals strict compliance for cooperative banks.

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

Basis of Penalty and Regulatory Process

According to a press release from RBI, the penalty was imposed under the order dated June 12, 2026, by exercising powers under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The central bank stated that after supervisory findings revealed compliance deficiencies, 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 written response and oral submissions made during the personal hearing, RBI found that the bank had sanctioned loans to relatives of its directors. The monetary penalty was imposed as this charge was sustained.

The statutory inspection by RBI was conducted with reference to the bank’s financial position as of March 31, 2025. The focus of the action is on regulatory non-compliance, not on deciding the validity of any transaction or agreement between the bank and its customers.

Impact on Cooperative Banking Sector and Further Scope

This penalty underscores the importance of internal controls and governance standards in cases of lending to related parties for cooperative banks. RBI clarified that this monetary penalty does not preclude any other possible regulatory action, meaning further steps may be taken if necessary.

In the cooperative banking landscape of the Nashik region, this case signals that regulatory oversight is not limited to financial status alone, but also examines board-level conduct and loan sanctioning processes. This may increase pressure on other cooperative banks in the sector to strengthen their compliance systems.

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