Recorded RBI impact
Fine: Rs 3.00 L
Monetary penalty · Fresh imposition
Published by RBI
8 Jun 2026
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹3 lakh on The Karnal Central Cooperative Bank Limited, Haryana for non-compliance with RBI directions on Know Your Customer (KYC). After a statutory inspection by NABARD and a show-cause process, RBI found that the bank had not put in place a system for periodic review of risk categorisation of accounts and had not installed robust software for effective identification and reporting of suspicious transactions. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after supervisory inspection and subsequent show-cause proceedings found sustained charges of non-compliance with directions on Know Your Customer (KYC). Specifically, the bank failed to put in place a system for periodic review of risk categorisation of accounts and failed to put in place robust software for effective identification and reporting of suspicious transactions. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Operating Impact
The bank must absorb the penalty and strengthen its KYC/AML compliance framework, especially periodic customer-risk reviews and suspicious transaction detection/reporting. The order does not state any operational restriction on customers, but it signals supervisory scrutiny and the possibility of further RBI action if deficiencies persist.
Regulatory Basis
- Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 3.00 L
- Order Date
- 3 Jun 2026
- Effective From
- 3 Jun 2026
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank