The Reserve Bank of India has imposed a monetary penalty of Rs 40,000 on Youth Development Co-operative Bank Ltd. for non-compliance with regulatory guidelines related to Know Your Customer (KYC) norms and inoperative bank accounts.
The penalty was imposed through an order dated May 6, 2026, under the provisions of the Banking Regulation Act, 1949, following supervisory observations made during the statutory inspection of the bank based on its financial position as of March 31, 2025.
According to RBI, the cooperative bank had reactivated certain inoperative accounts without obtaining mandatory KYC documents from customers, violating RBI directions on “Inoperative Accounts/Unclaimed Deposits in Banks” and customer due diligence norms.
After issuing a show-cause notice and examining the bank’s written reply and oral submissions, RBI concluded that the compliance deficiencies were established and warranted penal action.
The central bank clarified that the penalty pertains solely to regulatory shortcomings and does not impact the legality or validity of transactions carried out between the bank and its customers.
