RBI Fines Gujarat based Cooperative Bank for Rule Violations

Ahmedabad/Mehsana: The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹16.30 lakh on Shree Kadi Nagarik Sahakari Bank Ltd., located in Mehsana district of Gujarat, for failing to comply with key regulatory norms.

The penalty, ordered on May 6, 2026, relates to violations of RBI guidelines on ‘Exposure Norms and Statutory / Other Restrictions – Urban Cooperative Banks (UCBs)’ and ‘Management of Advances’.

Key Violations

According to RBI, the bank:

• Breached prudential exposure limits for a group of connected borrowers
• Failed to ensure proper end-use of funds for certain loans it had sanctioned

Inspection Findings

The action follows a statutory inspection conducted by RBI based on the bank’s financial position as of March 31, 2025. After identifying irregularities, RBI issued a notice to the bank.

Following the bank’s response and oral submissions during a personal hearing, RBI concluded that the charges were valid and warranted a penalty.

Legal Provisions Invoked

The penalty has been imposed under provisions of the Banking Regulation Act, 1949, specifically:

• Section 47A(1)(c)
• Sections 46(4)(i) and 56

RBI Clarification

RBI clarified that:

• The penalty is based on regulatory compliance deficiencies
• It does not question the validity of customer transactions
• Further action may still be taken if necessary