RBI Imposes Rs 14.25 Lakh Penalty on Nagar Sahkari Bank for Regulatory Violations

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 14.25 lakh on Nagar Sahkari Bank Ltd, Maharajganj, Uttar Pradesh, for not complying with various regulatory directions issued by the central bank. The order imposing the penalty was dated 26 May 2026.

This follows a statutory inspection by RBI of the bank’s financial position as on March 31, 2025. During the inspection RBI found several instances of non-compliance with the banking regulations. The RBI had issued a show-cause notice, taken into account the written reply and oral submissions made by the bank and arrived at the conclusion that the violations were serious enough to call for a penalty.

According to RBI, the bank failed to properly classify certain borrowers as Non-Performing Assets (NPAs) and did not correctly identify and categorize some existing NPAs on an ongoing basis. The bank also exceeded regulatory limits on unsecured loans provided to individual borrowers as well as at the overall portfolio level.

In addition, the bank did not upload borrower credit information to Credit Information Companies (CICs), which is a mandatory requirement. RBI also found deficiencies in the bank’s loan sanctioning process, saying adequate precautions were not taken to avoid deficiencies in some of the credit approvals.

RBI clarified that the penalty is only on the basis of regulatory compliance failures. The action does not affect the validity of any transactions or agreements between the bank and its customers. The central bank further said that the penalty is without prejudice to any further action that the regulator may take against the bank in future.