The Reserve Bank of India has imposed a monetary penalty of ₹13.30 lakh on Surat People’s Co-operative Bank Ltd., Surat. The RBI penalty on Surat People’s Co-operative Bank was ordered on July 10, 2026. It was levied for non-compliance with RBI directions on ‘Board of Directors – UCBs’.
Key Details of the RBI Penalty
The RBI conducted a statutory inspection of the bank based on its financial position as of March 31, 2025. Supervisory findings revealed clear regulatory violations. As a result, the central bank issued a show-cause notice to the bank, asking it to explain why a penalty should not be imposed.
The bank submitted a written reply and also made oral submissions during a personal hearing. However, RBI found that the charge against the bank was sustained. Therefore, it proceeded with the monetary penalty under Section 47A(1)(c), read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The specific violation involved certain directors participating in Board meetings where proposals were discussed and approved — proposals in which those directors held a direct or indirect interest. This is a serious breach of governance norms for urban co-operative banks (UCBs).
What This Means for Customers and the Bank
Customers of Surat People’s Co-operative Bank need not worry about their transactions. RBI has clearly stated that this action targets regulatory deficiencies only. It does not question the validity of any transaction or agreement the bank has made with its customers.
Additionally, the RBI penalty on Surat People’s Co-operative Bank does not rule out further action by the regulator. The central bank reserves the right to initiate additional proceedings against the bank if required. Meanwhile, the bank must strengthen its internal governance processes to avoid future violations.
This penalty is part of RBI’s broader effort to enforce stricter compliance among urban co-operative banks across India. For example, directors must recuse themselves from board decisions where they have a personal interest. Such conflict-of-interest rules are fundamental to sound banking governance.
Customers and stakeholders should stay informed about regulatory developments affecting co-operative banks. For more details, you can refer to the official RBI press release.
Source: RBI Press Releases
