RBI Penalises Central Bank of India Over KYC and Financial Inclusion Violations

The Reserve Bank of India (RBI) has imposed a monetary penalty amounting to Rs 63.60 lakh on the Central Bank of India for not adhering to certain directions issued by it concerning the ‘Know Your Customer (KYC)’ and ‘Financial Inclusion – Access to Banking Services – Basic Savings Bank Deposit Account (BSBDA)’.

The said action has been taken by the Central Bank through an order dated March 23, 2026, in exercise of its powers granted under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

Previously, the RBI had conducted a statutory inspection of the bank for supervisory evaluation (ISE 2025), with reference to its financial position as of March 31, 2025. The inspection concluded that the bank had not complied with certain provisions of RBI directions. In conclusion, a show cause notice (SCN) was issued to the bank, seeking clarification on why the proposed penalty should not be imposed on it for the non-compliance committed by it.

For which the bank had furnished a proper reply, along with additional submissions and also oral submissions during the personal hearing. Considering all, the bank found that the bank had failed at uploading the KYC records of certain customers onto the Central KYC Records Registry within the statutory time limit. Additionally, some additional BSBD accounts of certain customers were opened by the bank; however, it was noted that these customers were already holding BSBD accounts in the bank itself.

This action is taken because the bank did not follow certain legal rules. It does not mean that any transactions or agreements between the bank and its customers are invalid. Also, the fine imposed does not stop the RBI from taking any further action against the bank if needed.