RBI Penalises Two Maharashtra Co-op Banks for KYC and Credit-Information Compliance Lapses
The Reserve Bank of India (RBI) announced monetary penalties on two Maharashtra co-operative banks on 31 August 2026 for separate lapses in Know Your Customer (KYC) compliance and credit-information reporting. The banks are Jai Bhawani Sahakari Bank Ltd., Pune, fined Rs 2.03 lakh, and The Mumbai District Central Co-operative Bank Ltd., fined Rs 20,000.
| Bank | Penalty | Order date | RBI press release | Directions not complied with |
|---|---|---|---|---|
| Jai Bhawani Sahakari Bank Ltd., Pune | Rs 2.03 lakh | 28 August 2026 | 2026-2027/1005 | Membership of Credit Information Companies (CICs) by Co-operative Banks; KYC |
| The Mumbai District Central Co-operative Bank Ltd., Maharashtra | Rs 20,000 | 25 August 2026 | 2026-2027/1004 | KYC |
Jai Bhawani Sahakari Bank: CIC reporting and risk reviews
According to RBI Press Release 2026-2027/1005, the statutory inspection of Jai Bhawani Sahakari Bank was conducted with reference to its financial position as on 31 March 2025. Based on supervisory findings of non-compliance, RBI issued a show-cause notice. After considering the bank's reply, its additional submissions and oral submissions at a personal hearing, RBI found two charges sustained:
- the bank had failed to report credit information of its borrowers to all Credit Information Companies; and
- the bank had failed to review the risk categorisation of accounts at the prescribed periodicity.
Because the first charge concerns credit-information reporting, the penalty was imposed under two statutes: Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, and Section 25(1)(iii) read with Section 23(4) of the Credit Information Companies (Regulation) Act, 2005.
Mumbai District Central Co-operative Bank: CKYCR uploads
RBI Press Release 2026-2027/1004 states that the statutory inspection of The Mumbai District Central Co-operative Bank was carried out by the National Bank for Agriculture and Rural Development (NABARD) with reference to the bank's financial position as on 31 March 2025. The same show-cause, reply and personal hearing process was followed. The sustained charge was that the bank had failed to upload customers' KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeline. This penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
In both releases RBI said the action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement the bank entered into with its customers. The penalty is also without prejudice to any other action RBI may initiate against the bank.
What auditors and compliance teams should check
The three failures cited are process controls that leave a clear evidence trail, which makes them easy for inspectors to test:
- CIC reporting: confirm that borrower data is submitted to every Credit Information Company, not only one or two, and reconcile submission logs with the loan book.
- Risk re-categorisation: check that the periodic review of customer risk categories is scheduled in the core banking system and that exception reports show reviews actually completed on time.
- CKYCR uploads: track the gap between account opening and upload of KYC records to CKYCR, and follow up pending uploads.
For statutory and concurrent auditors of co-operative banks, these are points to test with system data rather than policy documents, since a policy on paper does not show that the required action was taken within the timeline.
Updated on 28 September 2026: linked both RBI press releases, added the press release numbers, order dates, NABARD's role in the Mumbai DCCB inspection and a comparison table, and removed repetition.
