What changed
RBI issued a penalty order on June 25, 2026, after a statutory inspection as of March 31, 2025 revealed non-compliance. The bank failed to adhere to exposure norms and the graded cyber security framework for UCBs.
What it means for you
This penalty signals RBI's zero-tolerance for lax credit discipline and weak cyber controls in cooperative banks. Lenders must tighten loan sanction processes for nominal members and enforce multi-factor authentication on core systems to avoid similar actions.
What you must do
- Review loan sanction limits for nominal members against RBI exposure norms.
- Implement two-factor authentication for all Core Banking Solution access points.
- Conduct internal audits to ensure compliance with cyber security graded framework.
- Update board-approved policies to reflect RBI's latest directions on exposure and IT security.
Who it affects
The Citizens Urban Cooperative Bank Ltd., Jalandhar, RBI supervisory teams monitoring cooperative banks
What specific violations led to this penalty?
The bank sanctioned loans beyond the prescribed regulatory limit to certain nominal members and failed to put in place two-factor authentication for accessing the Core Banking Solution.
Does this penalty invalidate any customer transactions?
No, the action is based on regulatory compliance deficiencies and does not pronounce on the validity of any transaction or agreement with customers.