The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹5.50 lakh on The Rohika Central Co-operative Bank Limited, Bihar. The penalty was issued on September 2, 2025, for the bank’s non-compliance with provisions of the Banking Regulation Act, 1949, and with certain RBI directions related to ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’ and ‘Know Your Customer (KYC)’.
Key Details 📝
- Bank: The Rohika Central Co-operative Bank Limited, Bihar
- Penalty Amount: ₹5.50 lakh (Rupees Five Lakh Fifty Thousand only)
- Date of Order: September 2, 2025
- Inspecting Authority: National Bank for Agriculture and Rural Development (NABARD)
- Inspection Reference Date: Financial position as of March 31, 2024
- Violations:
- Contravention of Section 9 read with Section 56 of the Banking Regulation Act, 1949.
- Non-compliance with RBI directions on ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’ and ‘Know Your Customer (KYC)’.
- Failure to dispose of certain Non-Banking Assets within the prescribed period.
- Failure to submit credit information of its customers to all four Credit Information Companies (CICs).
- Failure to upload KYC records of customers onto the Central KYC Records Registry (CKYCR) within the required timeline.
Root Cause Analysis (RCA) 🔍
- Failure to dispose of Non-Banking Assets: This could be due to a lack of a clear internal policy for the timely disposal of such assets, a lack of dedicated personnel to handle the process, or a breakdown in the system for tracking and reporting these assets.
- Incomplete Credit Information Submission: The bank’s failure to submit credit information to all four CICs suggests a possible procedural gap or a technical issue. It could be that the bank’s systems are not integrated to automatically report to all required CICs, or there is a lack of understanding or oversight regarding the full scope of the reporting requirement.
- Untimely CKYCR Uploads: The failure to upload KYC records within the prescribed timeline points to a potential backlog in operations. This might be due to a shortage of staff, inadequate training on the new CKYCR process, or a manual and inefficient workflow that can’t keep up with the volume of new customer onboarding.
Preventive Controls 🛡️
- Asset Management: Establish a robust Non-Banking Asset Management Policy with clear timelines and responsibilities for the disposal of such assets. Implement a system to automatically flag assets that are approaching their disposal deadline to ensure timely action.
- Data Management and Reporting: Implement a centralized system that is integrated with all four CICs to ensure that customer credit information is automatically and accurately submitted. This would remove the risk of manual oversight and ensure complete data submission.
- KYC Compliance: Create a KYC Compliance Team dedicated to ensuring that all customer KYC records are uploaded to CKYCR within the stipulated timeline. This team would be responsible for conducting regular audits and training staff on the latest KYC norms and procedures. The bank could also automate the process of uploading KYC records to CKYCR.
Lessons Learned 🧠
- Compliance is not a one-time activity: It requires continuous monitoring and a systematic approach to ensure adherence to all regulatory directions. The bank’s repeat non-compliance with KYC norms (referencing a previous penalty in June 2024 for similar issues) shows a failure to learn from past mistakes.
- Invest in technology and process automation: Manual processes for critical functions like data submission and KYC uploads are prone to error and can’t keep up with regulatory demands. Investing in automated systems is crucial for maintaining compliance and operational efficiency.
- Ensure adequate training: All staff, especially those in compliance and operations, must be well-versed in the latest regulations and internal policies. Regular training and awareness programs can prevent many compliance failures.