RBI Penalises Two Maharashtra Co-op Banks for KYC and Credit-Information Compliance Lapses

The Reserve Bank of India has imposed monetary penalties on two Maharashtra co-operative banks for separate compliance failures involving Know Your Customer requirements and credit-information reporting. The enforcement actions, announced on August 31, 2026, concern Jai Bhawani Sahakari Bank Ltd., Pune and The Mumbai District Central Co-operative Bank Ltd., Maharashtra.

Jai Bhawani Sahakari Bank fined ₹2.03 lakh

RBI said it imposed a ₹2.03 lakh penalty on Jai Bhawani Sahakari Bank by an order dated August 28, 2026. The cited areas of non-compliance were RBI directions on membership of Credit Information Companies by co-operative banks and Know Your Customer requirements.

The statutory inspection was conducted with reference to the bank’s financial position as on March 31, 2025. After the supervisory process, show-cause notice, the bank’s reply, additional submissions and oral submissions during a personal hearing, RBI said two charges were sustained.

- The bank failed to report credit information of its borrowers to all Credit Information Companies.

- The bank failed to review the risk categorisation of accounts at the prescribed periodicity.

RBI cited its powers under 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. The release is numbered 2026-2027/1005.

Mumbai District Central Co-operative Bank fined ₹20,000

In a separate action, RBI imposed a ₹20,000 penalty on The Mumbai District Central Co-operative Bank Ltd. by an order dated August 25, 2026 for non-compliance with KYC directions. The statutory inspection in this case was conducted by NABARD with reference to the bank’s financial position as on March 31, 2025.

The sustained charge was that the bank failed to upload customers’ KYC records to the Central KYC Records Registry within the prescribed timeline. RBI’s release is numbered 2026-2027/1004 and cites Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

Why the findings matter for compliance teams

The two orders focus on operational compliance rather than disputed customer transactions. RBI expressly stated that the penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transaction or agreement entered into by the banks with their customers. It also stated that the penalties are without prejudice to any other action that may be initiated.

For banking compliance, internal audit and finance teams, the practical lesson is specific: customer due-diligence controls are not limited to collecting KYC documents. They also extend to timely CKYCR uploads, periodic risk-category reviews and complete reporting to applicable Credit Information Companies. Each of those processes needs evidence of completion within prescribed timelines.

Professionals reviewing co-operative banks or similar regulated entities may therefore want to test not only whether policies exist, but whether system reports, exception logs and periodic-review workflows demonstrate that the required actions were actually completed.

The Jai Bhawani Sahakari Bank release and the Mumbai District Central Co-operative Bank release are the operative RBI sources for the two enforcement actions.

RBI’s August 31 enforcement batch highlights three concrete control areas for regulated entities: complete CIC reporting, periodic KYC risk re-categorisation and timely CKYCR uploads. Compliance and internal-audit teams should treat these as auditable operational controls rather than policy-only requirements.

Key takeaway

Fresh RBI enforcement releases identify concrete KYC, CKYCR and CIC reporting failures with practical compliance relevance.