The Reserve Bank of India (RBI) has, by an order dated October 28, 2025, imposed a monetary penalty of Rs 25 lakh (Rupees Twenty Five Lakh only) on The Mehsana Urban Co-operative Bank Limited, Gujarat (the bank), for non-compliance with certain directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters - UCBs’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The statutory inspection of the bank was conducted by RBI with reference to its financial position as on March 31, 2024. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.

After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by it, RBI found that the following charge against the bank was sustained, warranting imposition of monetary penalty:

The bank did not classify credit facilities of certain borrowers as non-performing assets (NPAs).

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.