RBI imposes monetary penalty on Bandhan Bank for violation of Banking Regulations

RBI imposes monetary penalty on Bandhan Bank for violation of Banking Regulations

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 41.80 lakh on Bandhan Bank Limited. The order is dated April 21, 2026, because the bank violated certain rules under the Banking Regulation Act, 1949. It also did not fully follow RBI guidelines related to “Know Your Customer” (KYC). The RBI used its powers under Section 47A(1)(c) read with Section 46(4) of the Act to take this action.

Inspection and Findings

RBI carried out a legal inspection of the bank. This inspection reviewed the bank’s financial position on March 31, 2025. After the inspection, RBI found some issues related to non-compliance with rules and regulations. RBI sent a notice to Bandhan Bank. The notice asked the bank to explain why a penalty should not be imposed on it for its failure to comply with the said RBI directions, considering these findings and related correspondence.

Key Violations Identified

After reviewing the bank’s written response and hearing its oral submissions, RBI confirmed the following issues:

• The bank did not carry out periodic reviews of risk classification for certain accounts.
• The bank approved loans related to its directors, which is not allowed under the rules.
• The RBI decided to impose the monetary penalty.

Clarification from RBI

RBI clarified that this action is based only on failures in following rules and regulations. It does not comment on the validity of any transactions or agreements between the bank and its customers. RBI also stated that this penalty does not prevent it from taking any further action against the bank if required.