RBI Penalizes Sultanpur Jilla Sahkari Bank ₹3 Lakh for Regulatory Violations

NABARD Audit Uncovers Compliance Gaps

The Reserve Bank of India (RBI) has issued a monetary penalty of ₹3.00 lakh on Sultanpur Jilla Sahkari Bank Ltd., located in Uttar Pradesh, on June 23, 2026. The enforcement action follows a statutory inspection of the bank's financial position as of March 31, 2025, conducted by the National Bank for Agriculture and Rural Development (NABARD). The audit report identified significant compliance gaps, prompting the central bank to issue a show-cause notice regarding regulatory failures. After reviewing the bank's written response and oral submissions during a personal hearing, the RBI concluded that the allegations of non-compliance were sustained and warranted a financial penalty.

Violations in KYC, Credit Reporting, and DEA Fund

The RBI's penalty order details several key areas where the cooperative bank failed to meet regulatory standards:

• DEA Fund Delay: The bank failed to transfer eligible unclaimed deposit balances to the Depositor Education and Awareness (DEA) Fund within the legally prescribed timelines, violating Section 26A read with Section 56 of the Banking Regulation Act, 1949.
• Non-Reporting to Credit Information Companies (CICs): The bank did not report borrower data to Credit Information Companies, violating guidelines under the Credit Information Companies (Regulation) Act, 2005. This failure compromises the integrity of the credit-scoring ecosystem.
• KYC and Risk Management Failures: The bank lacked robust, automated transaction-monitoring software capable of identifying and reporting suspicious activities. Furthermore, it failed to execute mandatory periodic reviews of risk categories for its customer accounts.

Scope of the Central Bank Penalty

The penalty has been imposed under the authority of Section 47A(1)(c) read with Section 46(4)(i) and Section 56 of the Banking Regulation Act, 1949. The RBI emphasized that this enforcement action is strictly 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 depositors or borrowers. The bank is required to rectify the highlighted operational flaws and report compliance to prevent further regulatory escalation.