Reserve Bank of India Takes Strict Action Against Non-Compliance
RBI Penalties NBFC Registrations by Five Cooperative Banks: A penalty has been imposed on the institutions in violation of banking rules under the provisions of the Banking Regulation Act of 1949, and strict action was taken against the banks for non-compliance by the Reserve Bank of India and several monetary penalties were imposed on these banks. It has also cancelled the Certificate of Registration (CoR) of ten Non-Banking Financial Companies (NBFCs) which have been surrendered voluntarily by three NBFCs. The step is in line with RBI’s hardline policy to get the money lending companies in line with statutory provisions and regulatory frameworks. On March 10, 2025, the Reserve Bank of India (RBI), imposed a monetary penalty of ₹1.50 lakh (Rupees One Lakh Fifty Thousand Only) on Janata Sahakari Bank Ltd., Gondia, Maharashtra (the bank) for violation of the provisions of the Banking Regulation Act, 1949 (the Act) read with the directions issued by RBI. Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulations Act, 1949.
Monetary Penalties Imposed on Cooperative Banks
On 13 March 2025, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹1.50 lakh on Janata Sahakari Bank Ltd., Gondia, Maharashtra for non-compliance of the provisions of the Banking Regulation Act 1949 (the Act) read with the directions issued by RBI. Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulations Act, 1949. The bank is convicted of not transferring amounts of eligible unclaimed deposits to the Depositor Education and Awareness Fund (DEAF) within the period as prescribed. As of March 31, 2024, the bank’s financial position indicated certain regulatory lapses following a statutory inspection, prompting RBI to serve a show-cause notice to the bank, RBI said. The violations were confirmed by the RBI upon examination of the reply of the bank, oral submissions were made, and extra evidence was submitted, after which legal action was taken.
Similarly, penalties were levied on four other cooperative banks:
- Himachal Pradesh: Jogindra Central Co-operative Bank Ltd. — Penalty of ₹1 lakh for sanctioning or renewing loans connected with directors in contravention of section 20 of the BR Act.
- Anantnag Central Co-operative Bank Ltd., Jammu & Kashmir – ₹1-lakh penalty for accepting fresh deposits in violation of the RBI guidelines.
- Baramulla Central Co-operative Bank Ltd., Jammu & Kashmir – ₹5 lakh penalty for similar offenses in connection with deposits.
- Banking and Finance Gurdaspur Central Co-operative Bank Ltd., Punjab — Monetary penalty of ₹1 lakh for flouting regulations for sanctioning and renewing loan/advance against directors.
The actions were taken to ensure the company follows regulatory compliance and maintains financial discipline. RBI, however, said that these penalties would not affect the transactions or agreements that are in place between the banks and their customers.
Cancellation of NBFC Registrations
RBI has also taken strict action against ten NBFCs, cancelling their Certificates of Registration (CoR) on February 6, 2025. These companies, located in Kolkata, West Bengal, will no longer be allowed to operate as NBFCs. The affected entities include:
- Doyen Vyapar Private Limited
- Gaza Fincorp Private Limited
- Torrent Merchandise Private Limited
- Lokpriya Trade and Agency Private Limited
- Rani Sati Merchandise Private Limited
- Mahima Commercial Co-operative Private Limited
- Yogima Trading Private Limited
- Vaishnavi Vyapar Private Limited
- Ayse Credit Private Limited
- Raikot Finance and Investment Private Limited.
Also, three surrendered their licenses voluntarily and exited the financial business. Others are Arvi Techno Investment Private Limited (South Delhi), Panghat Finance Company Private Limited (Rohtas, Bihar) and Walton Street India Finance Private Limited (Mumbai). Regulatory Stop Gap and Industry Implication As the enforcement actions by the RBI highlight, the regulator is here to ensure fiscal discipline and legality among banks and establishments that transact at the cost of timeshare users. The penalties against cooperative banks underscore the need to comply with such requirements, especially when it comes to fund management and loan disbursement practices. Furthermore, the cancellation makes it clear that the RBI is bringing the whip down on non-banking financial companies not meeting regulatory expectations. While these measures may be monumental, they represent a slight shock to the entities and serve as mere deterrents to non-compliance and only continue to uphold the credibility and stability of India’s financial system. Stakeholders in the banking and finance sector are urged to re-evaluate their compliance mechanisms to prevent similar regulatory actions in the future.
RBI Press Release – https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=59995