RBI Slaps ₹7 Lakh Penalty on Sangli District Co-operative Bank for Sanctioning Director-Related Loans
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹7 lakh on the Sangli District Central Cooperative Bank Ltd., Maharashtra. This significant regulatory action stems from contraventions related to banking provisions under the Banking Regulation Act, 1949.The penalty was formally issued by the RBI in an order dated July 23, 2026. The sanctioning of director-related loans constituted a key violation of statutory compliance against which the bank was penalized.
Regulatory Action Over Directors' Loans
The penalty was imposed after a detailed review process conducted by the Reserve Bank of India (RBI). This action relates to the contravention of section 20(1) read with section 56 of the BR Act.The RBI found that the bank had sanctioned loans related to its directors. This charge warranted the imposition of a monetary penalty under the relevant sections of the Banking Regulation Act. The finding highlights deficiencies in statutory compliance at the institution level.
Inspection and Consequences for the Bank
Statutory inspection of the bank was conducted by National Bank for Agriculture and Rural Development (NABARD). The inspection focused on the financial position of Sangli District Central Co-operative Bank Ltd. as of March 31, 2025.Following the supervisory findings and subsequent correspondence, a notice was issued to the bank. This notice advised the institution to show cause why a penalty should not be imposed for its failure to comply with the prescribed provisions.
The RBI clarified that this monetary penalty is being imposed based on statutory compliance failures. It also noted that this action does not prejudice the validity of any transaction or agreement entered into by the bank with its customers.
Scope of RBI's Penalties and Oversight
This enforcement move falls under the powers conferred upon the RBI by section 47A(1)(c) read with sections 46(4)(i) and 56 of the BR Act. The action underscores the central bank's vigilant oversight role over regulated financial institutions, even at the cooperative level.The Chief General Manager (Brij Raj) confirmed that this penalty is an enforcement measure solely related to regulatory non-compliance. Furthermore, the RBI retained its authority to initiate any other necessary actions against the bank as required.
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