Page 20 - Banking Finance November 2025

a license cancellation. The bank will
remain under close supervision, and
the RBI may consider modifications or
further actions depending on develop-
ments. The central bank assured that
the directions are intended to safe-
guard the interests of depositors while
Ò»©­ giving the bank time to improve its fi-
nancial position.
The RBI’s continued oversight signals
its cautious approach toward protect-
ing public funds and maintaining stabil-
ity in the cooperative banking sector.

RBI imposes Rs. 3.5 crore penalty on 5 cooperative Amit Shah to inaugurate
Co-op Kumbh 2025, a
banks for regulatory violations
landmark event in India's
The Reserve Bank of India (RBI) has imposed a total monetary penalty of
Rs. 3.5 crore on five cooperative banks from Tamil Nadu and Karnataka for cooperative banking
various regulatory breaches. The banks penalised include Tamil Nadu State Union Home and Cooperation Minister
Apex Co-operative Bank Ltd, Kancheepuram Central Co-operative Bank Ltd, Amit Shah is set to inaugurate Co-op
Ramanathapuram District Central Co-operative Bank Ltd, Salem District Kumbh 2025, a flagship event aimed at
Central Co-operative Bank Ltd, and Karnataka Rajya Souharda Sahakari Bank highlighting the transformative jour-
Niyamit, Bengaluru. ney of India’s cooperative banking sec-
Among these, Tamil Nadu State Apex Co-operative Bank received the high- tor. Scheduled to take place in
est penalty of Rs. 2 crore for failing to comply with income recognition and Prayagraj, the event will bring to-
asset classification norms, as well as violating directives on exposure norms gether leaders, policymakers, and
and statutory liquidity ratio (SLR). The remaining four banks faced penalties stakeholders from across India’s coop-
ranging from Rs. 25 lakh to Rs. 50 lakh each for breaches related to non- erative ecosystem.
compliance with KYC norms, reporting deficiencies, and failure to adhere The initiative is being positioned as a
to RBI guidelines on loans and advances. massive leap in strengthening and
The RBI clarified that the penalties are based on lapses in regulatory com- modernising the cooperative sector,
pliance and are not intended to pronounce the validity of any transactions which plays a critical role in rural credit
or agreements entered into by the banks with their customers. and grassroots economic develop-
ment. The event will feature delibera-
tions on digital transformation, capac-
RBI extends restrictions on bank’s deteriorating financial health ity building, governance reforms, and
and governance issues. expanding cooperative reach to
Indian Mercantile Co-op
Under the extended restrictions, the underserved areas.
Bank till April 2026 bank is not permitted to grant or renew Organised under the Ministry of Coop-

The Reserve Bank of India (RBI) has loans, make investments, or disburse eration, Co-op Kumbh 2025 is expected
extended the regulatory directions payments without prior approval from to draw participation from over 5,000
imposed on Indian Mercantile Co-op- the RBI. Withdrawal limits for deposi- delegates, including representatives
erative Bank Ltd., Lucknow, for an- tors also continue to be capped, as from State Cooperative Banks (SCBs),
other six months, now valid up to April specified in the RBI’s earlier directives. District Central Cooperative Banks
12, 2026. These directions were first However, the RBI clarified that this (DCCBs), and Primary Agricultural
enforced in January 2020 due to the extension should not be interpreted as Credit Societies (PACS).

18 | 2025 | NOVEMBER | BANKING FINANCE