What changed
RBI issued a penalty order on June 30, 2026, against Nirmal Urban Co-operative Bank for non-compliance with directions on exposure limits and SAF operational instructions. The bank failed to reduce single borrower exposure by 50% of the applicable regulatory limit in certain cases and offered deposit rates higher than SBI's.
What it means for you
This penalty signals RBI's continued scrutiny of co-operative banks on exposure concentration and deposit pricing discipline. Lenders must strictly adhere to SAF-mandated exposure reductions and avoid offering deposit rates exceeding SBI's, as non-compliance invites monetary penalties and potential further action.
What you must do
- Review single borrower exposure limits against SAF requirements and ensure 50% reduction where applicable.
- Align deposit interest rates with the SBI benchmark to avoid pricing violations.
- Strengthen internal compliance monitoring for priority sector lending and exposure norms.
- Document all corrective actions taken in response to supervisory findings.
Who it affects
Nirmal Urban Co-operative Bank Ltd., All urban co-operative banks (UCBs) subject to SAF and exposure directions, RBI supervisory teams monitoring co-operative bank compliance
What specific SAF direction did the bank violate?
The bank did not reduce its single borrower exposure limit for fresh loans by 50% of the applicable regulatory limit in certain cases, as required under the Supervisory Action Framework.
Why is offering deposit rates higher than SBI's a violation?
RBI directions require UCBs to cap deposit interest rates at levels not exceeding those offered by State Bank of India, to prevent aggressive rate wars and ensure financial stability.