KYC Compliance Failure: RBI Imposes ₹50,000 Penalty on Hassan Co-operative Bank

KYC Compliance Failure: RBI Imposes ₹50,000 Penalty on Hassan Co-operative Bank​

The Reserve Bank of India (RBI) has imposed a significant monetary penalty against The City Co-operative Bank, Hassan, Karnataka. This regulatory action targets serious non-compliance regarding 'Know Your Customer (KYC)' directions issued by the central bank.

Monetary Penalty Imposed for KYC Non-Compliance​

The RBI ordered a fine of ₹ 50,000/- on the co-operative bank. The penalty was formalized through an order dated July 17, 2026. This action falls under the powers conferred upon the RBI via Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.

Specific Compliance Deficiency Identified​

The imposition stems from deficiencies identified during a statutory inspection conducted by the RBI. The inspection focused on the bank’s financial position as recorded up to March 31, 2025. Following supervisory findings of non-compliance with mandatory RBI directions, the notice for penalty was issued.

Failure to Upload Records onto CKYCR​

The primary charge sustained against the bank related directly to record management protocols. The City Co-operative Bank failed to upload the KYC records of its customers onto the Central KYC Records Registry (CKYCR). This failure occurred outside the prescribed regulatory timeline established by the RBI.

Clarity on Penalty Scope and Regulatory Action​

It is crucial to note that this disciplinary action addresses deficiencies in regulatory compliance only. The penalty does not seek to pronounce upon the validity or legitimacy of any transaction or agreement previously entered into between the bank and its customers. Furthermore, the monetary penalty remains without prejudice to any other actions the RBI may initiate against the bank in the future.