The Reserve Bank of India has imposed a monetary penalty of ₹10.10 lakh on Raigad District Central Co-operative Bank Ltd., Maharashtra. The RBI penalty order is dated July 23, 2026. It was issued for violations of the Banking Regulation Act, 1949, and RBI’s directions on Credit Information Companies (CICs) membership.
Key Details of the RBI Penalty
NABARD conducted a statutory inspection of the bank, reviewing its financial position as on March 31, 2025. Based on supervisory findings, RBI issued a show-cause notice to the bank. After reviewing the bank’s reply and additional submissions, RBI confirmed the charges and imposed the penalty.
The bank committed two specific violations. First, it sanctioned a director-related loan, which directly contravenes Section 20(1) of the Banking Regulation Act. Additionally, it failed to report borrower credit information to all Credit Information Companies, breaching RBI’s CIC membership directions.
RBI exercised its powers under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act. It also acted under Section 25(1)(iii) read with Section 23(4) of the Credit Information Companies (Regulation) Act, 2005. Therefore, the penalty carries legal backing under multiple statutory provisions.
What This Means for Customers and Compliance
Customers of the bank should note that this action targets regulatory non-compliance only. RBI has clearly stated that this penalty does not question the validity of any transaction or agreement between the bank and its customers. However, it signals the regulator’s firm stance on governance standards in co-operative banks.
Director-related loans are a long-standing concern in co-operative banking. Such transactions create conflicts of interest and expose depositors to undue risk. As a result, RBI consistently penalises banks that sanction loans to insiders without following due process.
Failing to report credit data to all CICs is equally serious. It weakens the credit information ecosystem and affects lenders across the country. Meanwhile, RBI has warned that this monetary penalty does not rule out further regulatory action against the bank.
Co-operative banks across India must treat this as a compliance reminder. Timely credit reporting and strict adherence to loan sanction norms are non-negotiable. For example, even smaller district-level banks face firm penalties when they fall short of these standards.
Source: RBI Press Releases
