**Summary:**
On September 8, 2025, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹3 lakh on Progressive Mercantile Cooperative Bank Limited, located in Dist. Ahmedabad, Gujarat. The penalty was levied due to the bank's non-compliance with RBI directions concerning Inspection Audit Systems in Primary Urban Co-operative Banks, Know Your Customer (KYC) guidelines, and Customer Protection – Limiting Liability of Customers of Co-operative Banks in Unauthorized Electronic Banking Transactions.
The statutory inspection of the bank, conducted with reference to its financial position as of March 31, 2024, revealed the following deficiencies: (i) conducting concurrent audits on a quarterly basis instead of simultaneous checks of transactions, with delayed report submissions; (ii) failure to conduct periodic reviews of risk categorization of certain accounts at least once every six months; and (iii) failure to enable customers to instantly reply to SMS alerts to notify objections to unauthorized electronic banking transactions.
The penalty was imposed under the powers vested in the RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The RBI clarified that this action is based on regulatory compliance deficiencies and does not reflect on the validity of any transaction or agreement between the bank and its customers. Furthermore, the imposition of this penalty does not preclude any other actions that the RBI may initiate against the bank.
For further information, contact the Department of Communication, Central Office, Reserve Bank of India, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001. Phone: 022-2266 0502. Email: helpdoc@rbi.org.in. Website: www.rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, also referred to as RBI.
Progressive Mercantile Cooperative Bank Limited, Dist. Ahmedabad, Gujarat: A cooperative bank located in Ahmedabad, Gujarat, which was penalized by the RBI.
Ahmedabad, Gujarat: The district and state where the Progressive Mercantile Cooperative Bank Limited is located.
Banking Regulation Act, 1949: The act under which the RBI derives its power to impose penalties, specifically Section 47A1c read with Sections 46(4)(i) and 56.
Inspection Audit Systems in Primary Urban Co operative Banks: One of the RBI directions with which the Progressive Mercantile Cooperative Bank Limited failed to comply.
Know Your Customer: One of the RBI directions with which the Progressive Mercantile Cooperative Bank Limited failed to comply.
Customer Protection Limiting Liability of Customers of Cooperative Banks in Unauthorized Electronic Banking Transactions: One of the RBI directions with which the Progressive Mercantile Cooperative Bank Limited failed to comply.
Puneet Pancholy: Chief General Manager at RBI who released the press release.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
September 11, 2025
RBI imposes monetary penalty on Progressive Mercantile Co-operative Bank
Limited, Dist. Ahmedabad, Gujarat
The Reserve Bank of India (RBl) has, by an order dated September 08, 2025,
imposed a monetary penalty of ₹3 lakh (Rupees Three Lakh only) on Progressive
Mercantile Co-operative Bank Limited, Dist. Ahmedabad, Gujarat (the bank) for non-
compliance with the certain directions issued by RBI on ‘Inspection & Audit Systems
in Primary (Urban) Co- operative Banks’, ‘Know Your Customer’ and ‘Customer
Protection - Limiting Liability of Customers of Co-operative Banks in Unauthorized
Electronic Banking Transactions’. 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 the 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, RBI found, inter alia, that the following charges against the
bank were sustained, warranting imposition of monetary penalty:
The bank had:
i) conducted concurrent audit on quarterly instead of conducting
simultaneous check of the transactions and reports were submitted with
delays;
ii) failed to carry out periodic review of risk categorisation of certain
accounts with such periodicity being at least once in six months; and
iii) failed to enable its customers to instantly respond by "Reply" to the SMS
alerts to notify the objection towards unauthorised electronic banking
transactions, if any.
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.
(Puneet Pancholy)
Press Release: 2025-2026/1081 Chief General Manager