RBI Slaps ₹63 Lakh Penalty on Bank of Baroda Over Misuse of KYC and Fair Lending Practices
RBI Imposes Monetary Sanction on Bank of Baroda for Non-Compliance
The Reserve Bank of India (RBI) has imposed a significant monetary penalty of ₹63.60 lakh on Bank of Baroda. The sanction, formalized by an order dated June 30, 2026, targets the bank's non-adherence to key regulatory mandates issued by the central bank.The action is directed against two primary areas: the 'Fair Practices Code for Lenders' and specific requirements related to Know Your Customer (KYC). This penalty was levied in exercise of powers granted under Section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.
Regulatory Findings Drive Penalty Action Against Bank of Baroda
The penal action followed a comprehensive Statutory Inspection for Supervisory Evaluation (ISE 2025). This evaluation was conducted by RBI using the bank's financial position as recorded on March 31, 2025.Based on findings from this supervisory inspection, RBI issued a formal notice to the bank, requiring it to show cause regarding potential penalties. After reviewing the bank’s response and personal hearings, the RBI upheld specific charges warranting the monetary penalty.
Key Violations Including Interest Discrepancies and KYC Lapses
The investigation revealed two distinct areas of non-compliance by Bank of Baroda that led to the imposition of the fine. The breaches relate both to lending practices and foundational customer record management.First, certain loan accounts were found where the bank collected interest rates exceeding those originally contracted with the customers. Second, a critical failure involved the timeline adherence regarding KYC records. The bank did not upload the KYC details of certain clients onto the Central KYC Records Registry (CKYCR) as prescribed by RBI timelines.
Scope of Penalty and Future Compliance Outlook
The imposition of this monetary penalty is specifically related to deficiencies in regulatory compliance at the institutional level. It is crucial to note that the action does not aim to determine the validity of any transaction or agreement established between Bank of Baroda and its clientele.Furthermore, RBI has stated that this monetary penalty stands without prejudice to any other corrective actions that may be initiated against the bank based on these findings. The ruling reinforces the RBI's commitment to stringent regulatory adherence across all scheduled banks.
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