RBI Penalizes Cooperative Bank for Non-Compliance Over NPA Classification Deficiencies
Monetary Penalty Imposed on Vikas Souharda Co-operative Bank
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹ 1 lakh on Vikas Souharda Co-operative Bank Limited, Hosapete, Karnataka. This action stems from the bank's non-compliance with specific directions issued by the RBI regarding income recognition and asset classification standards for UCBs.The penalty was officially ordered on August 20, 2026. It has been levied in exercise of powers conferred upon the RBI under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Supervisory Findings Lead to Penalty Imposition
The action is based on supervisory findings derived from a statutory inspection conducted by the RBI. The inspection assessed the bank's financial position as recorded up to March 31, 2025. A notice was previously issued to the bank regarding its failure to adhere to the specified directions.Following the bank's response and submissions during the personal hearing, the RBI determined that a significant charge against the cooperative bank was sustained, warranting the imposition of a monetary penalty.
Failure in NPA Classification Standards Sustained
The primary reason for this disciplinary action is the bank’s failure to correctly classify certain loan accounts as non-performing assets (NPAs). This regulatory lapse falls under the guidelines issued by RBI concerning 'Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs'.This decision highlights the importance of stringent adherence to regulatory compliance standards within the cooperative banking sector. The penalty is a direct consequence of deficiencies in adhering to mandated procedures.
RBI Clarifies Stance on Regulatory Action
The RBI has clearly stated that this action focuses solely on the deficiency in regulatory compliance and is not intended to prejudge the validity of any transaction or agreement made between the bank and its customers. This clarifies the nature of the penalty.Furthermore, the RBI emphasized that the imposition of this monetary penalty is without prejudice to any other actions that may be initiated by it against Vikas Souharda Co-operative Bank Limited in the future.
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