What changed
RBI, via order dated June 15, 2026, penalized the bank ₹1.50 lakh for contravening Section 20 read with Section 56 of the Banking Regulation Act, 1949, and non-compliance with KYC directions. The statutory inspection by NABARD as of March 31, 2025, revealed two sustained charges: sanction of director-related loans and delayed KYC record upload to CKYCR.
What it means for you
This penalty underscores RBI's zero-tolerance for related-party lending and KYC compliance gaps, even for co-operative banks. Banks must ensure timely CKYCR uploads and avoid director-related loans to prevent regulatory action. The fine is separate from any other enforcement RBI may pursue.
What you must do
- Review and tighten policies on director-related loans to ensure full compliance with Section 20 of BR Act.
- Audit KYC record upload timelines to CKYCR and fix any delays immediately.
- Conduct internal training for staff on KYC/AML and related-party transaction norms.
- Ensure NABARD inspection findings are addressed promptly to avoid penalties.
Who it affects
The Chitradurga District Co-operative Central Bank Ltd., All co-operative banks in India, Banks subject to NABARD inspections, Compliance and KYC teams at co-operative banks
What specific violations led to this penalty?
The bank sanctioned loans to directors (violating Section 20 of BR Act) and failed to upload customer KYC records to CKYCR within the prescribed timeline.
Does this penalty affect the bank's transactions with customers?
No, RBI clarified the action is based on compliance deficiencies and does not question the validity of any customer transaction or agreement.
What is the significance of the CKYCR upload requirement?
CKYCR is RBI's central registry for KYC records; timely upload ensures uniform KYC compliance and helps prevent money laundering. Delays attract penalties.