What changed
RBI issued a monetary penalty order on June 30, 2026, against Bank of Baroda for non-compliance with Fair Practices Code for Lenders and KYC directions. The penalty followed a statutory inspection (ISE 2025) that found two sustained charges: charging excess interest in some loan accounts and delayed KYC record uploads to CKYCR.
What it means for you
Banks must strictly adhere to contracted interest rates and avoid any deviation, even unintentional. Delayed submission of KYC records to CKYCR remains a compliance red flag. This penalty signals RBI's zero-tolerance for procedural lapses in lending and KYC processes, reinforcing the need for robust internal audits.
What you must do
- Review all loan accounts to ensure interest charged matches the contracted rate exactly.
- Audit KYC record upload timelines to CKYCR and fix any delays immediately.
- Strengthen internal controls to detect and correct pricing errors before supervisory inspections.
- Train lending and compliance teams on Fair Practices Code and KYC submission deadlines.
Who it affects
Bank of Baroda
What specific violations led to the penalty?
Two violations: charging interest higher than the contracted rate in certain loan accounts, and failing to upload KYC records of some customers to CKYCR within the prescribed timeline.
Does this penalty invalidate any loan agreements?
No. RBI clarified the action is based on regulatory compliance deficiencies and is not intended to pronounce on the validity of any transaction or agreement with customers.
What is the legal basis for this penalty?
The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.