RBI Imposes Rs 7.5 Lakh Penalty on Himachal Pradesh State Co-operative Bank for KYC Violations

The Reserve Bank of India (RBI) has imposed a penalty of Rs 750,000 on Himachal Pradesh State Co-operative Bank Limited. This decision was taken on 10 April 2026, while its information was given through a press note issued on 13 April 2026.

According to the RBI, the bank had not properly followed some important rules related to Know Your Customer (KYC). For this reason, this action was taken. This penalty has been imposed under the provisions applicable under the Banking Regulation Act, 1949, Section 47A(1)(c), along with Sections 46(4)(i) and 56.

Actually, the National Bank for Agriculture and Rural Development (NABARD) had investigated the bank. This inspection was done on the basis of the financial position as of 31 March 2025. During the investigation, some shortcomings in following RBI rules came to light.

In view of these shortcomings, the RBI sent a show-cause notice to the bank and asked why a penalty should not be imposed on it. The bank responded to this notice and also presented its views in the personal hearing. After considering the reply and arguments, RBI accepted that there has been a violation of rules by the bank; hence, it is necessary to impose a penalty.

One important thing that came to light in the investigation was that the bank had not properly implemented the system of periodically reviewing the risk classification of accounts. Whereas, as per the rules, such a review should be done at least every six months.

RBI has made it clear that this action has been taken only on the basis of regulatory lapses. This does not mean that any question has been raised on the validity of any transaction made by the bank or any agreement entered into with the customers. Also, if further need arises, the RBI can also take other separate actions. This information has been given in the official press release issued by the RBI.