What changed
RBI's statutory inspection with reference to the bank's financial position as on March 31, 2025 revealed that the bank had levied penal charges for non-maintenance of minimum balances in certain inoperative accounts. This contravened RBI's directions on 'Inoperative Accounts / Unclaimed Deposits in Banks - Revised Instructions'. After a show-cause notice and personal hearing, RBI sustained the charge and imposed the penalty by an order dated May 29, 2026.
What it means for you
This penalty underscores RBI's strict stance on protecting depositors' interests, especially regarding inoperative accounts. Banks must ensure they do not impose charges on such accounts beyond what RBI permits. For lenders, it's a reminder to audit their inoperative account handling processes to avoid similar regulatory action, even for small amounts.
What you must do
- Review your bank's policy on inoperative accounts to ensure no penal charges are levied for minimum balance shortfalls.
- Conduct an internal audit of all inoperative accounts to identify any past or current improper charges.
- Train branch staff on RBI's revised instructions for inoperative accounts and unclaimed deposits.
- Establish a monitoring mechanism to flag and rectify any non-compliant charges proactively.
Who it affects
Sarvodaya Commercial Co-operative Bank Ltd., All co-operative banks in India, Banks with inoperative accounts or unclaimed deposits
What specific rule did Sarvodaya Commercial Co-operative Bank violate?
The bank levied penal charges for non-maintenance of minimum balances in certain inoperative accounts, which goes against RBI's revised instructions on inoperative accounts and unclaimed deposits.
How much was the penalty and under what legal provision?
The penalty was ₹20,000, imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Does this penalty affect the validity of the bank's customer transactions?
No, RBI clarified that the action is based on regulatory compliance deficiencies and is not intended to pronounce on the validity of any transaction or agreement with customers.