RBI Slaps ₹2 Lakh Penalty on Pune Co-op Bank Over Critical KYC and Operational Compliance Lapses

RBI Slaps ₹2 Lakh Penalty on Pune Co-op Bank Over Critical KYC and Operational Compliance Lapses​

The Reserve Bank of India (RBI) has levied a monetary penalty of ₹2 lakh on Shree Laxmi Co-operative Bank Ltd. in Pune. This action stems from the bank's failure to adhere to key regulatory guidelines, particularly concerning Know Your Customer (KYC) protocols and account maintenance. The regulatory action was formally ordered by the RBI via a notice dated May 22, 2026.

Grounds for Monetary Penalty Imposition​

The RBI's intervention was based on non-compliance related to three specific directions: the 'Know Your Customer (KYC)' guidelines, 'Maintenance of Deposit Accounts - Primary (Urban) Co-operative Banks,' and 'Inoperative Accounts / Unclaimed Deposits in Banks Revised Instructions.'

The statutory inspection of the bank covered its financial standing as of March 31, 2025. Following supervisory findings, the bank was given a notice requiring it to show cause as to why a penalty should not be imposed. The RBI subsequently found multiple instances of deficiency in regulatory compliance after considering the bank's response.

Major Compliance Deficiencies Highlighted​

The RBI sustained four critical charges against Shree Laxmi Co-operative Bank Ltd. These operational lapses point to systemic weaknesses in the bank's risk management and record-keeping processes.

Firstly, the bank failed to conduct the mandatory periodic review of risk categorization for its accounts. This review is required to be performed at least once every six months. Secondly, the bank did not upload the required KYC records of its customers onto the Central Know Your Customer Registry (CKYCR) within the prescribed timelines.

Furthermore, the supervisory body noted issues regarding customer communication and account management. The bank was found to have levied penal charges for non-maintenance of minimum balance without first notifying the affected customers. Finally, the lack of an annual review of accounts, specifically those without customer-induced transactions for over a year, was also flagged.

Regulatory Stance and Legal Basis​

This action underscores the RBI's commitment to maintaining stringent regulatory standards across the banking sector. The penalty was imposed in exercise of powers conferred under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The RBI clarified that this penalty pertains solely to deficiencies in regulatory compliance. It explicitly noted that the imposition of the penalty is not meant to determine the validity of any specific transaction or agreement made between the bank and its customers. The regulator further cautioned that the monetary penalty does not prejudice any other action that the RBI may choose to initiate against the institution.