The Reserve Bank of India has imposed an RBI penalty on Arvind Sahakari Bank Ltd., Katol, Maharashtra, amounting to ₹11 lakh. The central bank issued this order on July 16, 2026. The penalty targets non-compliance with RBI directions on Housing Finance for Urban Cooperative Banks (UCBs) and Interest Rate on Deposits.
Key Details of the RBI Penalty
RBI exercised its powers under Section 47A(1)(c), read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The statutory inspection of the bank covered its financial position as on March 31, 2025. Based on supervisory findings, RBI issued a show-cause notice to the bank.
The bank responded to the notice and made additional written and oral submissions during a personal hearing. However, RBI found the charges sustained after reviewing all submissions. Therefore, it proceeded with the monetary penalty.
Specifically, the bank had sanctioned loans to builders and contractors for land acquisition. Additionally, it paid extra interest to certain depositors who were not eligible for such benefits. Both violations breached RBI’s regulatory framework for cooperative banks.
What This Means for Customers and Cooperative Banks
RBI has clarified that this action addresses regulatory compliance deficiencies only. It does not question the validity of any transaction the bank made with its customers. Meanwhile, the penalty does not rule out further action that RBI may initiate against the bank.
For cooperative banks across India, this serves as a strong reminder. RBI actively monitors UCBs through regular statutory inspections. As a result, banks must strictly follow housing finance norms and deposit interest rate guidelines.
This case also highlights RBI’s ongoing push to strengthen governance in the urban cooperative banking sector. For example, sanctioning loans for land acquisition by builders directly violates UCB housing finance directions. Therefore, compliance teams at cooperative banks should review their loan and deposit practices immediately.
About Arvind Sahakari Bank
Arvind Sahakari Bank Ltd. is based in Katol, Maharashtra. It operates as an urban cooperative bank under RBI’s regulatory oversight. The bank now faces scrutiny following this penalty order.
RBI’s action underscores its zero-tolerance approach to non-compliance. Additionally, it signals that smaller cooperative banks remain firmly within the regulator’s supervisory radar.
Source: RBI Press Releases
