The Kheda People’s Co-operative Bank Ltd., Kheda, Gujarat

RBI imposed a monetary penalty after a statutory inspection found the bank had not complied with certain directions on placement of deposits with other banks by primary (urban) co-operative banks and on Priority Sector Lending (PSL) targets/classification. RBI also found that the bank breached the prudential inter-bank counterparty exposure limit and failed to deposit the required amount in the MSE Refinance Fund administered by SIDBI against the shortfall in PSL achievement for FY 2022-23, even after a cautionary letter and show-cause process. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The bank must absorb the penalty and address the underlying compliance issues, particularly PSL shortfall-related fund deposits and inter-bank exposure controls. The release does not itself impose a new business restriction, but it signals continued regulatory scrutiny and leaves open the possibility of further action if non-compliance persists.