The Reserve Bank of India has imposed a monetary penalty of ₹10 lakh on Ashok Cooperative Bank, located in Ahmednagar, Maharashtra, for regulatory non-compliance. This action was taken under the order dated 29 June 2026 and is based on a statutory inspection of the bank’s financial position as of 31 March 2025.
Highlights
- RBI has imposed a fine of ₹10 lakh on Ashok Cooperative Bank for violation of Section 20(1) of the Banking Regulation Act, 1949.
- The investigation confirmed that the bank had sanctioned a loan to one of its directors, and after a show cause notice and response, the charges were substantiated.
- RBI clarified that this penalty is solely for regulatory non-compliance and does not prevent any future action.
This article was translated from the original. Read the original version by our correspondent here.
Regulatory Violation and Basis for Penalty
According to a press release by the Reserve Bank of India (Reserve Bank of India), this penalty has been imposed for violation of Section 20(1) of the Banking Regulation Act, 1949. The central bank stated that this action was taken using powers under Section 47A(1)(c) read with Section 46(4)(i) and Section 56.During the inspection, RBI found that the bank had sanctioned a loan to one of its directors. Based on supervisory findings and related correspondence, a show cause notice was issued to the bank, and after considering its response, the charges were found to be substantiated.
Implications for the Banking Sector and Further Scope
The central bank clarified that this action is solely based on regulatory non-compliance and is not intended to decide on the validity of any transaction or agreement between the bank and its customers. RBI also stated that this monetary penalty does not prevent it from initiating any further action.This move signals to the cooperative banking sector that regulatory standards, especially in matters like lending to related parties, are being strictly enforced. In such cases, the process of inspection, notice, and response followed by penal action remains a key part of the central bank’s supervisory framework.
In our previous report, we covered the latest seizure of assets worth ₹1,021 crore in the Reliance Home Finance (RHFL) and Reliance Commercial Finance (RCFL) case under ED’s PMLA investigation. That article highlighted key points such as alleged diversion of public funds through shell companies, and the rising total of seizures/attachments under PMLA and FEMA in cases related to the group.
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