What changed
RBI issued a monetary penalty of ₹2,10,000 on June 12, 2026, against the bank for non-compliance with directions on loans to directors' relatives. The statutory inspection as of March 31, 2025, revealed that the bank had sanctioned loans to relatives of its directors, violating RBI's related-party lending rules.
What it means for you
This penalty underscores RBI's zero-tolerance for related-party lending violations, especially in co-operative banks. Banks must ensure strict adherence to the 'Loans and Advances to Directors, their Relatives, and Firms/Concerns' directions to avoid similar penalties. The action is a reminder that supervisory findings can lead to monetary penalties even after the bank's reply and personal hearing.
What you must do
- Review your bank's loan sanction process to ensure no loans are extended to directors' relatives without proper board approval and compliance with RBI directions.
- Conduct an internal audit of all related-party transactions, especially loans, to identify any non-compliance before the next statutory inspection.
- Update your compliance manual and train loan officers on the specific RBI circular on loans to directors and their relatives.
- Ensure that any such loans are reported in the board's agenda and minutes with clear justification and adherence to exposure limits.
Who it affects
The Nasik Road Deolali Vyapari Sahakari Bank Ltd., Nashik
What specific violation led to this penalty?
The bank sanctioned loans to relatives of its directors, which violated RBI's directions on 'Loans and Advances to Directors, their Relatives, and Firms/Concerns in which they are Interested'.
What legal provisions were used to impose the penalty?
The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Does this penalty affect the validity of the loans already sanctioned?
No, the RBI clarified that the penalty is for regulatory non-compliance and does not pronounce on the validity of any transaction or agreement with customers.