RBI Imposes ₹3.31 Crore Penalty on J&K Bank for Regulatory Non-Compliance

Jammu, Feb 3: The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹3,31,80,000 (₹3.31 crore) on Jammu and Kashmir Bank Limited for non-compliance with various regulatory directives. The penalty was levied through an order dated January 14, 2025, under the provisions of the Banking Regulation Act, 1949.

The RBI found J&K Bank in violation of its directions regarding ‘Financial Inclusion – Access to Banking Services (BSBDA)’, ‘Know Your Customer (KYC)’, and ‘Loans and Advances – Statutory and Other Restrictions’. The penalty follows RBI’s statutory inspection of the bank’s financial position as of March 31, 2022.

Key Violations Identified:

1. The bank permitted certain Basic Savings Bank Deposit Account (BSBDA) holders to open regular savings accounts, violating norms.
2. It failed to identify beneficial owners while opening accounts for certain legal entities.
3. It allowed operations in small accounts that did not meet regulatory requirements.
4. It sanctioned a working capital demand loan to a corporation against government subsidy receivables.

The RBI stated that the penalty is based on deficiencies in regulatory compliance and does not question the validity of the bank’s transactions with its customers. It also clarified that further actions, if required, may be taken against the bank.