Recorded RBI impact
Fine: Rs 2.00 L
Monetary penalty · Fresh imposition
Published by RBI
27 May 2026
Case Brief
The Reserve Bank of India imposed a monetary penalty of Rs 2 lakh on The Lunawada People’s Co-operative Bank Ltd., Dist. Mahisagar, Gujarat, by order dated May 22, 2026. The action followed a statutory inspection and supervisory findings that the bank had not complied with RBI directions on loans and advances to directors, their relatives, and firms/concerns in which they are interested. RBI concluded that the bank sanctioned loans where relatives of its directors were guarantors, and imposed the penalty after issuing a show-cause notice and considering the bank’s reply and oral submissions.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following a statutory inspection of the bank as on March 31, 2025. Based on supervisory findings and related correspondence, RBI issued a show-cause notice and, after considering the bank's reply and oral submissions, sustained the charge that the bank had sanctioned loans in which relatives of its directors stood as guarantors, in breach of RBI directions on loans and advances to directors, their relatives, and firms/concerns in which they are interested.
Operating Impact
The bank must bear the monetary penalty, but the release does not impose a new operational restriction or cancellation. The penalty also does not pronounce on the validity of the underlying transactions, and RBI states that further action may still be initiated separately.
Regulatory Basis
- Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 2.00 L
- Order Date
- 22 May 2026
- Effective From
- 22 May 2026
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank