RBI has imposed a fine of Rs 8 lakh on The Sambalpur District Co-operative Central Bank in Odisha for KYC and compliance lapses.

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RBI penalty Sambalpur Bank

Highlights

RBI has imposed a fine of Rs 8 lakh on The Sambalpur District Co-operative Central Bank for KYC compliance and other regulatory lapses.
NABARD’s statutory review found that the bank failed to transfer eligible unclaimed amounts to DEAF by March 31, 2025, and did not have a system for customer risk review.
This RBI action signals to cooperative banks that strengthening regulatory compliance in KYC, dormant deposit management, and customer risk control is essential.

This article was translated from the original. Read the original version by our correspondent here.

Basis of Penalty and Regulatory Findings

According to the Reserve Bank of India’s press release dated July 2, 2026, this monetary penalty was imposed due to violations of Section 26A read with Section 56 of the Banking Regulation Act and deficiencies in compliance with certain instructions issued on ‘Know Your Customer (KYC)’. The central bank took this action under the powers conferred by Section 47A(1)(c) read with Section 46(4)(i) and Section 56.

The matter progressed after a statutory inspection by the National Bank for Agriculture and Rural Development (NABARD), which reviewed the bank’s financial position as of March 31, 2025. Based on supervisory findings and related correspondence, the bank was issued a show cause notice asking why penalty should not be imposed for non-compliance with the relevant provisions and directions.

After considering the bank’s written reply and oral submissions during the personal hearing, the RBI found that the bank failed to transfer eligible unclaimed amounts to the Depositor Education and Awareness Fund within the prescribed period. The regulator also found that the bank did not have a system in place for periodic review of customer risk categorization.

Impact on the Cooperative Banking Sector

The RBI clarified that this action is based on deficiencies in statutory and regulatory compliance and is not intended to comment on the validity of any transaction or agreement between the bank and its customers. The central bank also stated that this monetary penalty is imposed without prejudice to any other action that may be initiated in the future.

This step signals to cooperative banks that strengthening control mechanisms in areas such as KYC frameworks, management of dormant and unclaimed deposits, and customer risk monitoring remains a regulatory priority. For regional cooperative banking institutions, including those in Odisha, it underscores the need for timely review and improvement of compliance processes.

In our previous report, we covered the Enforcement Directorate’s fresh attachment of assets worth Rs 1,021 crore under PMLA in the case related to Reliance Home Finance (RHFL) and Reliance Commercial Finance (RCFL), highlighting key points such as alleged diversion of public funds through shell companies, total attachments rising to Rs 20,367 crore, and the ongoing extensive investigation under PMLA/FEMA.

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