**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 provisions under the Banking Regulation Act, 1949, and non-compliance with RBI directions regarding the Internal Ombudsman Scheme, Customer Service in Banks, and KYC Directions. The order was issued on December 01, 2025, following a supervisory evaluation of the bank's financial position 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 for contravention of Section 26A of the Banking Regulation Act, 1949, and non-compliance with certain RBI directions.
* **Grounds for Penalty:**
* Failure to escalate certain rejected complaints to the Internal Ombudsman.
* Failure to send final letters to customers regarding complaint redressal and awareness of Banking Ombudsman recourse.
* Failure to transfer eligible amounts to the Depositor Education and Awareness (DEA) Fund.
* Lack of face matching technology in Video-based Customer Identification Process (V-CIP) and failure to confirm customer information.
* **RBI's Stance:**
* The action is based on deficiencies in regulatory compliance.
* The penalty does not prejudice any other action that RBI may initiate.
**Impact Analysis**
* **Jammu and Kashmir Bank Limited**
* **Impact:** Financial penalty of ₹99.30 lakh and potential reputational damage due to non-compliance.
* **Action Required:** Needs to address the identified deficiencies in its processes and ensure compliance with RBI regulations to avoid further penalties.
* **Customers of Jammu and Kashmir Bank Limited**
* **Impact:** Potential for delayed or inadequate resolution of complaints and lack of awareness about their rights regarding grievance redressal.
* **Action Required:** Should ensure their complaints are escalated appropriately and seek recourse through the Banking Ombudsman if dissatisfied with the bank's response.
* **Reserve Bank of India**
* **Impact:** Reinforces regulatory oversight and commitment to ensuring compliance within the banking sector.
* **Action Required:** Continue to monitor Jammu and Kashmir Bank Limited for compliance and take further action if necessary.
Key Entities Referenced
Banking Regulation Act, 1949 (BR Act): Key legislation related to banking regulation, cited for contravention.
Reserve Bank of India (RBI): The regulator imposing the penalty.
Jammu and Kashmir Bank Limited: The bank penalized by the RBI.
Internal Ombudsman Scheme 2018: One of the RBI directions the bank failed to comply with.
Know Your Customer (KYC) Directions: One of the RBI directions the bank failed to comply with.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व ब ैंक
RESERVE BANK OF INDIA
वेबसाइट : www.rbi.org.in/hindi संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
December 05, 2025
Reserve Bank of India imposes monetary penalty on Jammu and
Kashmir Bank Limited
The Reserve Bank of India (RBI) has, by an order dated December 01, 2025, imposed
a monetary penalty of ₹99.30 lakh (Rupees Ninety nine lakh thirty thousand only) on
Jammu and Kashmir Bank Limited (the bank) for contravention of the provisions of section
26A of the Banking Regulation Act, 1949 (BR Act) and non-compliance with certain
directions issued by RBI on ‘Internal Ombudsman Scheme 2018’, ‘Customer Service in
Banks’, and ‘Know Your Customer (KYC) Directions’. This penalty has been imposed in
exercise of powers conferred on RBI under the provisions of Section 47 A(1)(c) read with
Section 46(4)(i) of the BR Act.
The Statutory Inspection for Supervisory Evaluation of the bank was conducted by RBI
with reference to its financial position as on March 31, 2024. Based on supervisory
findings of non-compliance with the provisions of BR Act, RBI directions and related
correspondence in that regard, a notice was issued to the bank advising it to show cause
as to why penalty should not be imposed on it for contravention of the provisions of BR
Act and non-compliance with the said RBI directions.
After considering the bank’s reply to the notice, additional submissions made by it and
oral submissions made during the personal hearing, RBI found that the following charges
against the bank were sustained, warranting imposition of monetary penalty:
i. The bank did not escalate certain complaints that were partly / wholly rejected by
its internal grievance mechanism to the Internal Ombudsman for a final decision;
ii. The bank did not send final letters to its customers regarding redressal of their
complaints and thereby failed to ensure that customers were made aware of their
rights to approach Banking Ombudsman in case they were not satisfied with the
bank’s response;
iii. The bank did not transfer eligible amount in certain accounts to Depositor
Education and Awareness (DEA) Fund within the stipulated period; and
iv. The bank did not have a face matching technology in Video-based Customer
Identification Process (V-CIP) and also failed to confirm the economic and financial
profile/information submitted by the customer during the V-CIP.
This action is based on deficiencies in statutory and regulatory compliance and is not
intended to pronounce upon the validity of any transaction or agreement entered into by
the bank with its customers. Further, imposition of monetary penalty is without prejudice
to any other action that may be initiated by RBI against the bank.
(Brij Raj)
Press Release: 2025-2026/1648 Chief General Manager