RBI Imposes Penalty on Ganganagar Kendriya Sahkari Bank for KYC Non-Compliance

The Reserve Bank of India (RBI) imposed a monetary penalty of ₹3 lakh on Ganganagar Kendriya Sahkari Bank Limited, Rajasthan, through an order dated February 09, 2026. The action followed findings of non-compliance with the central bank’s Know Your Customer (KYC) directions.

The penalty has been levied under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act. RBI clarified that the action is based on regulatory lapses and does not impact the validity of customer transactions or agreements.

RBI Order and Regulatory Framework

The monetary penalty stems from the bank’s failure to comply with RBI’s prescribed KYC guidelines. Under the provisions of Section 47A(1)(c), the central bank is empowered to act against regulated entities for breaches of directions.

The order dated February 09, 2026, formally imposed the ₹3 lakh penalty on the bank for lapses highlighted in supervisory assessments. RBI’s communication emphasised that the enforcement action is intended to address compliance deficiencies and not to question any contractual obligations between the bank and its customers.

Inspection Findings from NABARD Review

A statutory inspection of the bank was conducted by the National Bank for Agriculture and Rural Development (NABARD) based on its financial position as on March 31, 2025. The inspection identified areas where the bank had not adhered to the RBI’s KYC guidelines.

Subsequent supervisory correspondence led RBI to issue a show‑cause notice asking why a penalty should not be imposed. After examining the bank’s written response and oral submissions during a personal hearing, RBI concluded that the violations were substantiated and warranted monetary penalisation.

Specific Lapses in KYC Compliance

RBI noted two primary areas of non-compliance that formed the basis for the penalty. The bank did not have an adequate system for periodic review of customer risk categorisation, which is required at least once every six months.

Additionally, the bank failed to conduct periodic updation of KYC information within the stipulated timelines set by the regulator. These lapses represent key elements of the KYC framework designed to strengthen customer due diligence processes and mitigate financial crime risks.

Read More: RBI Cancels Certificates of Registration for 7 NBFCs.

Conclusion

RBI’s decision to impose a ₹3 lakh penalty on Ganganagar Kendriya Sahkari Bank highlights the importance of adherence to KYC norms. The action follows inspection findings and due process involving notices, responses and hearings.

The lapses pertained to deficiencies in risk categorisation reviews and KYC updation processes. The central bank has reiterated that the penalty addresses compliance shortcomings and does not affect the validity of customer transactions.

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