What changed

The Reserve Bank of India (RBI) has issued an order dated March 17, 2026, imposing a monetary penalty of ₹50,000 on The Pali District Central Co-operative Bank Ltd. for failing to comply with specific Know Your Customer (KYC) directions. The non-compliance identified during a statutory inspection by NABARD related to the bank's failure to establish a system for periodic review of account risk categorisation, which should occur at least once every six months.

This enforcement action highlights the critical importance of robust KYC procedures and regular risk assessment reviews for financial institutions. While this specific penalty is for a relatively small amount, it underscores the RBI's commitment to enforcing regulatory compliance. The bank must ensure its internal controls and review processes are updated to meet the specified periodicity to avoid future penalties and potential further regulatory action.

What to do next

Implement a system for periodic review of account risk categorisation at least every six months.
Review and update KYC compliance procedures to ensure adherence to RBI directions.

Penalties

₹50,000

Source document (simplified)

Press Releases

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| Date : Mar 23, 2026 | |
| RBI imposes monetary penalty on The Pali District Central Co-operative Bank Ltd., Rajasthan | |
| | The Reserve Bank of India (RBI) has, by an order dated March 17, 2026, imposed a monetary penalty of ₹50,000/- (Rupees Fifty Thousand only) on The Pali District Central Co-operative Bank Ltd., Rajasthan (the bank) for non-compliance with certain directions issued by RBI on 'Know Your Customer (KYC)'. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act.

The statutory inspection of the bank was conducted by National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charge against the bank was sustained, warranting imposition of monetary penalty:

The bank had failed to put in place a system of periodic review of risk categorisation of accounts, with such periodicity being at least once in six months.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

(Brij Raj)
Chief General Manager

Press Release: 2025-2026/2307 | | The Reserve Bank of India (RBI) has, by an order dated March 17, 2026, imposed a monetary penalty of ₹50,000/- (Rupees Fifty Thousand only) on The Pali District Central Co-operative Bank Ltd., Rajasthan (the bank) for non-compliance with certain directions issued by RBI on 'Know Your Customer (KYC)'. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act.

The statutory inspection of the bank was conducted by National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charge against the bank was sustained, warranting imposition of monetary penalty:

The bank had failed to put in place a system of periodic review of risk categorisation of accounts, with such periodicity being at least once in six months.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

(Brij Raj)
Chief General Manager

Press Release: 2025-2026/2307 |
| The Reserve Bank of India (RBI) has, by an order dated March 17, 2026, imposed a monetary penalty of ₹50,000/- (Rupees Fifty Thousand only) on The Pali District Central Co-operative Bank Ltd., Rajasthan (the bank) for non-compliance with certain directions issued by RBI on 'Know Your Customer (KYC)'. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act.

The statutory inspection of the bank was conducted by National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charge against the bank was sustained, warranting imposition of monetary penalty:

The bank had failed to put in place a system of periodic review of risk categorisation of accounts, with such periodicity being at least once in six months.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

(Brij Raj)
Chief General Manager

Press Release: 2025-2026/2307 | |