At a glance:
On May 22, 2025, the Reserve Bank of India (RBI) imposed a ₹2.10 lakh penalty on Murshidabad District Central Co-operative Bank Ltd., West Bengal. Why? For failing to follow basic KYC norms, risk categorisation of customers, and not reporting borrower info to credit information companies (CICs) — i.e., things every co-op bank should do… but somehow didn’t.
What’s the case?
This isn’t just some random fine. RBI has cited:
- Non-compliance with KYC guidelines
- Failure to be an active member of Credit Information Companies
- Violations of Section 47A(1)(c) under the Banking Regulation Act, 1949
- And lapses under the Credit Information Companies (Regulation) Act, 2005
But it all began with a NABARD inspection on the bank’s books as of March 31, 2024, and what they found was… let’s just say, worthy of a slow clap.
The Violations (or Let’s Call Them “How to Get Penalised by RBI”)
| Issue | What They Should’ve Done | What They Actually Did |
|---|---|---|
| KYC Updates | Periodic KYC updates as per RBI norms | Didn’t bother |
| Risk Categorisation | Review risk profile of accounts every 6 months | Also didn’t bother |
| CIC Reporting | Submit borrower data to 3 credit bureaus | Completely ignored it |
Legal Muscle RBI Used
- Banking Regulation Act, 1949: Section 47A(1)(c) + Sections 46(4)(i) & 56
- Credit Information Companies Act, 2005: Sections 25(1)(iii) + 23(4)
Yes, RBI didn’t just wag a finger — they pulled out the legal bazooka.
What Did the Bank Say?
The RBI gave Murshidabad DCCB a chance to explain — issued a show cause notice, heard them out during a personal hearing, and then said: “Thanks for your submission. You’re still fined.”
Translation: your explanation was as useful as a floppy disk in 2025.
Is ₹2.10 Lakh Even a Big Deal?
Let’s be real — for a co-operative bank, it kinda is.
Unlike your Kotaks or HDFCs, a district-level co-op bank isn’t exactly minting money. This fine may sting, but the real damage is reputational. Co-op banks already walk a tightrope between serving the rural economy and managing compliance. This just adds more spotlight — the kind nobody wants.
The Real Problem with Co-op Banks
- Many still operate like they’re in the 1990s — manually updated ledgers, outdated software, and a relaxed attitude towards regulations
- Some see KYC as a “fill-the-form formality” instead of a regulatory anchor
- Reporting to credit bureaus feels like snitching — but it’s legally required snitching
RBI’s Message to the Sector
“Fix your compliance… or we’ll fix it for you.”
Murshidabad DCCB is just the latest name in RBI’s naughty list. But co-operative banks across India should probably start paying attention — because if this was just a warning shot, the next one might hit harder.
EduInvesting Take
Murshidabad DCCB didn’t just ignore the rules — they ignored the bare minimum required for banking in 2025. The penalty may be small, but the message is loud:
- You can’t run a bank like a chai shop.
- You can’t avoid KYC checks like you avoid gym memberships.
- And you certainly can’t ghost the credit bureaus.
For RBI, this is just another day of cleaning up. For Murshidabad DCCB — it’s a costly lesson in doing your homework.
What Happens Now?
- The bank will likely begin KYC drives, CIC onboarding, and risk review drills at lightning speed
- Other co-operative banks may take this as a wake-up call to audit themselves before RBI does
- And hopefully, customers won’t suffer the consequences of their bank’s laziness
Author: Prashant Marathe
Published: May 27, 2025
Tags: RBI penalty, Murshidabad DCCB, KYC violation, CIC non-compliance, co-operative bank regulation, NABARD inspection, EduInvesting, banking news India, May 2025 regulatory actions
