The Reserve Bank of India has imposed a monetary penalty of ₹63.60 lakh on Bank of Baroda for non-compliance with certain regulatory directions. The order was issued on June 30, 2026, according to an RBI press release dated July 3, 2026.
The penalty relates to directions issued by the central bank on the Fair Practices Code for Lenders and Know Your Customer, or KYC, requirements. RBI said the action was taken under powers available to it under section 47A(1)(c), read with sections 46(4)(i) and 51(1), of the Banking Regulation Act, 1949.
A monetary penalty in this context is a regulatory action for a bank’s failure to comply with RBI directions. It is separate from any individual customer dispute and does not, by itself, decide whether a customer transaction or agreement is valid.
What led to the penalty
The findings came from RBI’s statutory Inspection for Supervisory Evaluation, referred to as ISE 2025. The inspection was conducted with reference to Bank of Baroda’s financial position as on March 31, 2025.
Such supervisory inspections are used by the regulator to assess whether banks are following applicable rules, directions and internal controls. In this case, RBI said supervisory findings showed non-compliance with certain directions issued by the central bank.
Based on those findings, RBI issued a notice to Bank of Baroda asking it to show cause why a penalty should not be imposed for the stated failures. A show-cause notice gives the regulated entity an opportunity to respond before the regulator takes a final decision.
RBI said it considered the bank’s reply to the notice, additional submissions made by the bank and oral submissions made during a personal hearing. After this process, the regulator found that some charges were sustained and warranted a monetary penalty.
Two charges cited by RBI
According to RBI, the first sustained charge was that Bank of Baroda had collected interest higher than the contracted rate of interest in certain loan accounts. The contracted rate is the rate agreed for a loan account, and charging above that rate can raise compliance concerns under lending-related directions.
The second sustained charge was related to KYC compliance. RBI said the bank did not upload KYC records of certain customers to the Central KYC Records Registry, known as CKYCR, within the prescribed timeline.
KYC requirements are used by banks to identify and verify customers. CKYCR is the central registry for KYC records, and timely uploading of records helps maintain a standardised customer identification framework across regulated financial entities.
The RBI release did not provide details on the number of loan accounts involved, the period over which the lapses occurred, the amount of excess interest collected, or the number of customer KYC records uploaded late.
RBI’s clarification on the order
RBI clarified that the penalty is based on deficiencies in regulatory compliance. It said the action is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
The central bank also stated that the monetary penalty is without prejudice to any other action that may be initiated by RBI against Bank of Baroda. This means the penalty order does not prevent the regulator from taking separate action if it considers such action necessary under applicable law.
The press release was issued by Brij Raj, Chief General Manager, and carried the reference number 2026-2027/604.
Source: Reserve Bank of India Press Releases.
