Reserve Bank of India imposes monetary penalty on Jammu and Kashmir Bank Limited

**Executive Summary** The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹99.30 lakh on Jammu and Kashmir Bank Limited for contravention of Section 26A of the Banking Regulation Act, 1949, and non-compliance with certain RBI directions. The order was issued on December 1, 2025, following a Statutory Inspection for Supervisory Evaluation as of March 31, 2024. **Key Points / Main Content** * **Penalty Imposition:** * RBI imposed a monetary penalty of ₹99.30 lakh on Jammu and Kashmir Bank Limited. * The penalty is due to contravention of Section 26A of the Banking Regulation Act, 1949 (BR Act). * It is also due to non-compliance with RBI directions on: * ‘Internal Ombudsman Scheme 2018’ * ‘Customer Service in Banks’ * ‘Know Your Customer (KYC) Directions’ * The penalty is imposed under the powers conferred on RBI by Section 47 A(1)(c) read with Section 46(4)(i) of the BR Act. * **Basis for Penalty:** * The Statutory Inspection for Supervisory Evaluation with reference to the bank's financial position as of March 31, 2024, revealed non-compliance. * RBI issued a notice to the bank advising it to show cause as to why the penalty should not be imposed. * Following the bank's reply and a personal hearing, RBI sustained the charges against the bank. * **Specific Charges Sustained:** * Failure to escalate certain complaints rejected by the internal grievance mechanism to the Internal Ombudsman. * Failure to send final letters to customers regarding the redressal of their complaints, thus not ensuring customer awareness of their rights to approach the Banking Ombudsman. * Failure to transfer eligible amounts to the Depositor Education and Awareness (DEA) Fund within the stipulated period. * Lack of face matching technology in Video-based Customer Identification Process (V-CIP) and failure to confirm economic/financial profile submitted by the customer during V-CIP. * **Clarification:** * The action is based on deficiencies in statutory and regulatory compliance. * It is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. * The monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank. **Impact Analysis** **Jammu and Kashmir Bank Limited** * **Impact:** The bank is required to pay a monetary penalty of ₹99.30 lakh and address the identified deficiencies in regulatory compliance. * **Action Required:** The bank must remit the penalty amount and rectify the deficiencies, including improving complaint escalation, customer communication, DEA fund transfers, and V-CIP procedures. **Customers of Jammu and Kashmir Bank Limited** * **Impact:** Customers may have experienced issues with complaint resolution and awareness of their rights. The deficiencies in V-CIP could potentially affect the security and verification of their financial profiles. * **Action Required:** Customers should be made aware of their rights to escalate unresolved complaints to the Banking Ombudsman. The bank must ensure that customers' economic and financial profile/information are secure and verified during the V-CIP. **Reserve Bank of India (RBI)** * **Impact:** RBI's regulatory oversight and enforcement capabilities are reinforced, ensuring compliance with banking regulations and protecting customer interests. * **Action Required:** RBI will continue to monitor the bank's compliance and may initiate further actions if necessary.

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