RBI Slaps ₹2 Lakh Fine on Jalore Co-operative Bank Over Major KYC Compliance Lapses

RBI Slaps ₹2 Lakh Fine on Jalore Co-operative Bank Over Major KYC Compliance Lapses​

Reserve Bank Imposes Penalty on Jalore Central Co-operative Bank for KYC Deficiencies​

The Reserve Bank of India (RBI) has levied a monetary penalty on The Jalore Central Co-operative Bank Limited, Rajasthan. This action follows findings related to the bank's compliance with critical regulatory guidelines, specifically concerning 'Know Your Customer' (KYC) norms.

The penalty, amounting to ₹ 2 lakh (Rupees Two Lakh only), was imposed by an official order dated May 22, 2026. The action was taken in exercise of powers granted under the Banking Regulation Act.

Grounds for RBI's Action and Statutory Oversight​

The RBI's decision stems from a statutory inspection conducted by the National Bank for Agriculture and Rural Development (NABARD). This review assessed the bank's financial position as of March 31, 2025.

Based on the supervisory findings and related correspondence, the regulator issued a notice to the bank. This notice advised the bank to explain why a penalty should not be imposed due to non-compliance with RBI's directions.

Following careful consideration of the bank's reply, additional submissions, and personal hearings, the RBI determined that specific charges against the institution were sustained.

Key Compliance Failures Identified by Regulators​

The regulatory investigation highlighted two critical failures in the bank’s operational processes. These deficiencies centered on maintaining robust customer data and internal risk management systems.

Firstly, the bank was found to have failed in putting a system in place for the periodic review of risk categorization of its accounts.

Secondly, the bank did not carry out the periodic updation of its customers' KYC details as required by prescribed periodicity.

Implications and Future Compliance Measures​

The RBI confirmed that the monetary penalty was imposed solely due to deficiencies in regulatory compliance. The central bank explicitly stated that this penalty does not comment on the validity of any transaction or agreement previously entered into by the bank with its customers.

Furthermore, the imposition of this fine is without prejudice to the right of the RBI to initiate any further action against the bank, should continued non-compliance be observed. The action underscores the RBI's commitment to maintaining high standards of regulatory adherence across the banking sector.