RBI Imposes Monetary Penalty on Railway Employees' Co-operative Bank Over Regulatory Failures and Compliance Gaps
The Reserve Bank of India (RBI) has imposed a monetary penalty totaling ₹1.05 lakh on The N.E. & E.C. Railway Employees' Multi-State Primary Co-operative Bank Ltd, Gorakhpur. This action follows a statutory inspection conducted by the RBI regarding the bank’s financial position as of March 31, 2025. The penalty was issued under an order dated June 30, 2026, for contravening specific provisions of the Banking Regulation Act, 1949 (BR Act).The regulatory action targeted multiple compliance failures related to statutory guidelines and directions issued by the RBI concerning Credit Information Companies (CICs) and the management of unclaimed funds. The bank was found non-compliant with critical banking regulations despite a formal notice being issued advising it to show cause regarding the potential penalties.
Critical Compliance Failures Identified by RBI
The supervisory findings revealed two major areas where the co-operative bank fell short of statutory requirements. Firstly, the bank failed to transfer eligible unclaimed amounts to the mandated Depositor Education and Awareness Fund (DEAF) within the prescribed time frame.Secondly, the bank committed deficiencies related to credit reporting. Specifically, it failed to obtain membership from at least two Credit Information Companies (CICs). Furthermore, the bank neglected its duty by not submitting its borrowers' credit information to all four required CICs.
RBI’s Regulatory Action and Basis for Penalty
The monetary penalty of ₹1.05 lakh was imposed in exercise of powers conferred upon the RBI under Sections 47A(1)(c), Section 46(4)(i), and Section 56 of the BR Act. This measure is specifically related to the non-compliance with directions concerning 'Membership of Credit Information Companies (CICs) by Co-operative Banks'.The penalty stems from deficiencies in statutory and regulatory compliance rather than addressing the validity of any agreements or transactions entered into by the bank with its customers. The RBI confirmed that this action will not prejudice the potential initiation of further necessary actions against the bank moving forward.
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