RBI imposes penalty on United Puri-Nimapara Central Co-operative Bank in Odisha for KYC violation

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RBI’s penalty on KYC

Highlights

RBI has imposed a monetary penalty on United Puri-Nimapara Central Co-operative Bank under the provisions of the Banking Regulation Act for violation of KYC rules.
Following NABARD’s inspection of the bank’s financial position as of 31 March 2025 and supervisory findings, a show cause notice was issued to the bank for failing to upload records to CKYCR.
RBI’s action reflects a trend of strict financial penalties for cooperative banks for breaches of KYC compliance and record management deadlines.

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

Basis of Penalty and Regulatory Process

As stated in the Reserve Bank of India press release dated 14 July 2026, this penalty has been imposed under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The central bank stated that this step was taken after finding deficiencies in compliance with RBI’s ‘Know Your Customer (KYC)’ guidelines.

The National Bank for Agriculture and Rural Development (NABARD) conducted a statutory inspection of the bank with reference to its financial position as of 31 March 2025. Based on supervisory findings and related correspondence, a show cause notice was issued to the bank, asking why a penalty should not be imposed for failure to comply with the directions.

After considering the bank’s reply, additional submissions, and oral submissions made during the personal hearing, the RBI found the charges to be substantiated. According to the regulator, the bank failed to upload customers’ KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeframe.

Impact on the Cooperative Banking Sector

This action underscores RBI’s strictness regarding KYC compliance and record management for cooperative banks. It indicates that financial penalties may be imposed for non-adherence to customer identification process timelines, even if the matter is not directly related to a specific customer transaction.

The RBI clarified that the monetary penalty has been imposed solely on the grounds of regulatory non-compliance. The central bank also stated that this penalty is without prejudice to any other action that may be taken against the bank in the future.

In our previous report, we covered RBI’s announcement of the predetermined redemption prices for two Sovereign Gold Bond (SGB 2020-21 Series X and SGB 2021-22 Series IV) tranches maturing in July 2026. It was explained that these prices are based on the simple average of the closing price of 999 purity gold as published by IBJA, providing investors with clarity on cash flow and settlement at maturity.

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