1. Key Incident Details
| Bank Name | The Berhampur Co-operative Urban Bank Limited, Odisha |
| Penalty Amount | ₹2.00 Lakh |
| Order Date | February 11, 2026 |
| Reference Inspection | Financial position as on March 31, 2025 |
| Regulatory Violation | Non-compliance with ‘Exposure Norms and Statutory/Other Restrictions for UCBs’. Specifically, breaching prudential inter-bank (gross) exposure limits and inter-bank counter-party limits. |
2. Root Cause Analysis (RCA)
Based on the specific charge of breaching gross exposure and counter-party limits, the probable root causes include:
- Inadequate Treasury Monitoring: Lack of real-time monitoring systems to track cumulative exposure against specific counter-party banks.
- Policy Definition Gaps: Absence of internal “hard stops” or pre-deal checks in the investment policy that trigger before statutory limits are reached.
- Manual Aggregation Errors: Reliance on manual calculations for gross exposure across different instruments, leading to delayed recognition of breaches.
3. Preventive Controls & Remediation
- Automated Limit Enforcement: Implement Core Banking Solution (CBS) or Treasury Management System modules that enforce hard limits on Inter-Bank Gross Exposure (IBGE).
- Pre-Deal Validation: Mandate a pre-deal checklist that requires verification of current exposure levels against the specific counter-party before approving new placements.
- Daily Exposure Dashboards: Implementation of daily reports (MIS) for the Investment Committee highlighting utilization percentages of regulatory limits.
4. Lessons Learnt
Exposure norms are critical for preventing concentration risk. Co-operative banks must treat inter-bank limits not just as compliance targets but as vital risk management guardrails to protect capital solvency.
RBI Press Release
1. Key Incident Details
| Bank Name | The Ganganagar Kendriya Sahkari Bank Limited, Rajasthan |
| Penalty Amount | ₹3.00 Lakh |
| Order Date | February 09, 2026 |
| Reference Inspection | Financial position as on March 31, 2025 (conducted by NABARD) |
| Regulatory Violation | Non-compliance with ‘Know Your Customer (KYC)’ directions. Specifically failed to periodically review risk categorisation of accounts and carry out periodic updates of KYC. |
2. Root Cause Analysis (RCA)
The failure to perform periodic reviews and updates suggests the following systemic weaknesses:
- Absence of Review Framework: The bank failed to put in place a system for the periodic review of risk categorisation, which is required at least once every six months.
- Static Data Management: Customer data was likely treated as static, with no triggers set for “Re-KYC” based on the risk profile (High/Medium/Low) expiry dates.
- Process Oversight: Lack of supervisory oversight to ensure the operational staff were executing the periodic updation of KYC as per prescribed periodicity.
3. Preventive Controls & Remediation
- Automated Risk Scoring: Implement an algorithm in the CBS that automatically reviews account activity every 6 months to suggest changes in risk categorization (Low to High or vice versa).
- Re-KYC Alerts: configure system-generated alerts to branch managers 3 months prior to the expiration of valid KYC documents based on risk category.
- Centralized Compliance Monitoring: Establish a dedicated KYC compliance cell to audit a random sample of accounts monthly to ensure updation is tracking against the schedule.
4. Lessons Learnt
KYC is a dynamic lifecycle process, not a one-time onboarding event. Regulatory adherence requires a continuous cycle of review (Risk Categorization) and maintenance (Re-KYC updation) to prevent the financial system from being used for illicit activities.