RBI imposes monetary penalty on CSB Bank Limited

**Executive Summary** This press release, dated February 13, 2026, announces that the Reserve Bank of India (RBI) has imposed a monetary penalty of ₹63.60 lakh on CSB Bank Limited for non-compliance with certain RBI directions related to Business Correspondents (BCs) and Customer Service in Banks. The penalty was imposed following a Statutory Inspection for Supervisory Evaluation (ISE 2025) conducted with reference to the bank's financial position as of March 31, 2025. **Key Points / Main Content** * **Penalty Imposition:** * RBI imposed a monetary penalty of ₹63.60 lakh on CSB Bank Limited. * The penalty is for non-compliance with RBI directions on Business Correspondents (BCs) and Customer Service in Banks. * The action is based on deficiencies in statutory and regulatory compliance. * **Grounds for Penalty:** * The bank entered into arrangements with BCs for activities beyond the permissible scope. * The bank levied charges on savings bank accounts without ensuring customers were aware upfront. * **Regulatory Context:** * The penalty was imposed under powers conferred on RBI by section 47A(1)(c) read with section 46(4)(i) of the Banking Regulation Act, 1949. * The decision followed a Statutory Inspection for Supervisory Evaluation (ISE 2025) as of March 31, 2025. * RBI issued a show-cause notice to the bank regarding the non-compliance before imposing the penalty. **Impact Analysis** **CSB Bank Limited** * **Impact:** Faces a monetary penalty of ₹63.60 lakh and potential reputational damage. * **Action Required:** Needs to pay the penalty and rectify the identified non-compliance issues related to BC arrangements and customer charges, and to implement measures to avoid future regulatory breaches. **Customers of CSB Bank Limited** * **Impact:** Customers may have been unknowingly subjected to charges and potentially affected by unauthorized BC activities. * **Action Required:** No immediate action is required as the imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank. However, customers may want to review their account statements for any charges and to enquire if their BC-related transactions are in compliance with existing banking regulations. **Reserve Bank of India (RBI)** * **Impact:** Reinforces its role as a regulator and enforcer of banking regulations. * **Action Required:** Continue monitoring CSB Bank Limited's compliance and may initiate further actions if necessary.

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