The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 2.50 lakh on Kunbi Sahakari Bank Ltd., Mumbai, Maharashtra, through an order dated May 27, 2025, for non-compliance with specific RBI directives under the Supervisory Action Framework (SAF) and guidelines on Know Your Customer (KYC).
The penalty was levied under the powers granted to the RBI by Section 47A(1)(c), read with Sections 46(4)(i) and 56 of the Banking Regulation Act.
The RBI conducted a statutory inspection of the bank based on its financials as of March 31, 2024. Following the inspection, the bank was issued a show cause notice regarding its failure to comply with regulatory directions. After reviewing the bank’s response, supplementary submissions, and oral arguments during a personal hearing, the RBI concluded that violations had occurred, justifying the penalty.
Key violations included:
Granting fresh loans and advances without adequate collateral security such as term deposits, NSCs, KVPs, or insurance policies, and breaching the single exposure limit, in violation of SAF guidelines.
Failure to conduct timely reviews of account risk categorisation as required under KYC norms.
The RBI clarified that this action was taken due to regulatory compliance failures and does not question the legitimacy of the bank’s transactions or agreements with its customers. Additionally, the penalty is without prejudice to any further actions the RBI may initiate against the bank.