The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 2 lakh on The Lunawada People’s Co-operative Bank Ltd., Mahisagar district, Gujarat, for violating RBI norms related to loans and advances involving directors, their relatives, and associated entities.

The penalty was imposed through an order dated May 22, 2026, under the provisions of the Banking Regulation Act, 1949.

According to the RBI, the action followed a statutory inspection conducted with reference to the bank’s financial position as of March 31, 2025. During the supervisory review, the central bank found that the co-operative bank had sanctioned loans in cases where relatives of its directors acted as guarantors, which was in violation of RBI guidelines.

The RBI clarified that the penalty pertains only to regulatory compliance deficiencies and does not impact the validity of transactions or agreements entered into by the bank with its customers.