RBI Crackdown on Banks and Cooperatives Sends Shockwaves Through Financial Sector

Delhi - In a decisive move to uphold financial integrity, the Reserve Bank of India (RBI) has imposed substantial penalties on multiple financial institutions and assumed control over a cooperative bank, signaling its unwavering commitment to regulatory compliance.  

The Nainital Bank Limited faced a hefty fine of ₹56 lakh for failing to adhere to RBI directives concerning asset classification and fraud reporting. The central bank’s inspection revealed significant discrepancies between the bank's reported non-performing assets (NPAs) and those assessed during supervision, alongside lapses in fraud disclosure.  

Similarly, Ujjivan Small Finance Bank was penalized ₹6.7 lakh for breaching norms related to loans and advances, specifically concerning statutory and other restrictions. These actions underscore the RBI’s stringent oversight of financial institutions to ensure adherence to established guidelines.  

In a more severe measure, the RBI has taken control of the New India Co-operative Bank’s board for a 12-month period. This intervention follows the discovery of fund misappropriation and other supervisory concerns. Consequently, depositors have been temporarily barred from withdrawing funds, leading to public unrest and long queues outside the bank’s branches. To manage operations during this period, a former banking executive has been appointed as the administrator, supported by a Committee of Advisors.