RBI Imposes ₹1 Lakh Penalty on Jaipur Central Co-operative Bank for KYC Non-Compliance

The Reserve Bank of India has imposed a monetary penalty on The Jaipur Central Co-operative Bank Ltd., Rajasthan, for non-compliance with KYC-related regulatory directions. The order, dated January 30, 2026, follows supervisory findings arising from a statutory inspection.

The penalty amount stands at ₹1 lakh and has been levied under relevant provisions of the Banking Regulation Act. The RBI clarified that the action pertains solely to regulatory deficiencies and does not comment on the validity of customer transactions.

RBI’s Regulatory Action Following Inspection

The statutory inspection was conducted by the National Bank for Agriculture and Rural Development with reference to the bank’s financial position as on March 31, 2025. Following the inspection, the RBI observed instances of non-compliance with its KYC directions.

A show-cause notice was subsequently issued to the bank to explain the reasons for the observed lapses. After reviewing the bank’s written response and oral submissions, the RBI concluded that regulatory action was warranted.

Key Lapse Identified Under KYC Requirements

The RBI found that the bank had not implemented a system for periodic review of customer risk categorisation. The required periodicity, which should be at least once every 6 months, had not been followed.

This lapse formed the primary basis for the imposition of the penalty. The RBI determined that the deficiency reflected non-compliance with prescribed KYC norms that banks are obligated to follow.

Legal Basis for The Monetary Penalty

The monetary penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act. These provisions empower the RBI to take action in cases of regulatory non-compliance by co-operative banks.

The penalty is administrative in nature and is intended to reinforce adherence to regulatory standards. The action underscores the importance of maintaining proper systems for monitoring KYC compliance across all customer accounts.

Read More: RBI Reports 98.42% Return Of ₹2000 Banknotes After Withdrawal Announcement.

Conclusion

The RBI’s decision to impose a ₹1 lakh penalty highlights the significance of maintaining robust KYC monitoring systems in financial institutions. The supervisory findings indicate that the required periodic review framework had not been implemented by the Jaipur Central Co-operative Bank.

The action reinforces the expectation that banks must uphold regulatory standards consistently. The matter remains limited to compliance lapses, with no impact on customer transactions or agreements.

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