RBI Action: The RBI has imposed fines on several banks, including Kotak Mahindra Bank. Some have also been banned. Account holders should be aware of this. Let’s explore why the central bank took this step and what impact it will have on customers.
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RBI Action: The Reserve Bank of India (RBI) regulates all banks and NBFCs in the country. It always takes strict action when regulations are violated. In December, the RBI also took action against several banks, announcing this through a press release. Penalties were imposed on 11 banks for violating guidelines. Restrictions were also imposed on four banks due to their poor financial health.
The RBI imposed a fine of ₹61.95 lakh on Kotak Mahindra Bank. The related order was issued on December 11. The bank was accused of violating regulations related to basic savings bank deposit accounts. It also provided false information to credit information companies about some borrowers and arranged for business correspondent activities that were beyond its scope.
These banks were also fined:
- The Arakonam Co-operative Urban Bank Limited, Tamil Nadu, was fined ₹2.25 lakh for violating loan and KYC regulations.
- The Tamil Nadu Circle Post Co-operative Bank Limited was fined ₹50,000 by the RBI in an order issued on December 15. The bank had sanctioned advances against term deposits to nominal members, failing to meet the eligibility criteria for a financially sound and well-managed urban co-operative bank.
- The Kovilpatti Co-operative Urban Bank Limited, Tamil Nadu, was fined ₹1 lakh for violating loan regulations. It allowed its members to refund share capital, which had a CRAR below the regulatory minimum, and sanctioned some loans without complying with the norms for borrowing against pledged shares.
- The Co-operative Urban Bank Limited, Paralakhemundi, Odisha, was fined ₹13,000 by the RBI this month. The bank failed to provide customer information to four credit information companies.
- The RBI has imposed a fine of ₹2.25 lakh on The Avatamal Urban Co-operative Bank Ltd., Maharashtra. It sanctioned loans to nominal members in excess of the regulatory limit. Furthermore, it failed to report information about some borrowers classified as willful defaulters to credit information companies within the prescribed timeframe.
- The Assam Co-operative Apex Bank Ltd., Guwahati, was fined ₹50,000 for violating KYC regulations. The relevant order was issued to the bank on December 1.
- The RBI has imposed a fine of ₹1.50 lakh on The Pattukottai Co-operative Urban Bank Ltd., Tamil Nadu, for failing to upload customer KYC records to the Central KYC Records Registry within the stipulated timeframe. The bank also failed to transfer 20% of its net profit for the financial year 2023-24 to the statutory reserve. Loans were also sanctioned to some nominal members in excess of the prescribed regulatory limit.
- Jammu & Kashmir Bank Limited has been fined Rs 99.30 lakh. The bank violated the Internal Ombudsman Scheme 2018, customer service and KYC norms.
- The Kallidaikurichi Co-operative Urban Bank Limited, Tamil Nadu has been fined Rs 50,000. It allowed refunds to customers for share capital despite low CRAR.
- The Arni Co-operative Town Bank Limited, Tamil Nadu has been fined Rs 2 lakh. The bank violated loan/gold loan norms.
Restrictions imposed on these banks
- The RBI has imposed restrictions on The Guwahati Co-operative Urban Bank Limited. Customers can withdraw up to ₹35,000 from their accounts. The central bank will monitor the bank’s financial position for six months. The order is effective from December 17, 2025.
- Loknete RD (Appa) Kshirsagar Sahakari Bank Limited, Niphad Taluka, located in Nashik district, Maharashtra, has been ordered to cease operations from December 16. This restriction will remain in effect for six months. Account holders will not be permitted to withdraw funds.
- Nashik District Mahila Vikas Sahakari Bank Limited has also been ordered to cease operations from December 9. Customers will be able to withdraw up to ₹35,000 from their accounts.
- The Valsad Mahila Nagrik Sahakari Bank Limited, Gujarat, has also been placed under a six-month restriction, effective December 18. Withdrawals will not be permitted.
See RBI action notification here
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