The Reserve Bank of India imposed a monetary penalty of ₹63.60 lakh on CSB Bank Limited by order dated 6 February 2026, following an inspection that identified non-compliance with the central bank's directions on the permitted scope of Business Correspondent activities and with standards governing Customer Service in Banks. The penalty was publicly announced on 13 February 2026, on which date the RBI also disclosed fines against two other banks, as well as two NBFCs: DCB Bank received a penalty of ₹29.60 lakh and Bank of Maharashtra was assessed ₹32.50 lakh, with all three institutions penalised on the same day in separate RBI press releases.
CSB Bank Limited, headquartered in Thrissur, Kerala and formerly known as Catholic Syrian Bank, is a scheduled commercial bank with a history spanning more than a century. The RBI's action against the institution arose from findings of a Statutory Inspection for Supervisory Evaluation conducted in 2025, with reference to the bank's financial position as of 31 March 2025.
TWO DISTINCT COMPLIANCE FAILURES IDENTIFIED
The RBI identified two separate regulatory violations at CSB Bank. The first related to its Business Correspondent arrangements: the bank had entered into agreements with BC agents for activities that fall outside the defined scope of what the RBI permits such correspondents to carry out on behalf of licensed banking institutions. Business Correspondents serve as retail agents in areas where physical branch infrastructure is limited or absent, enabling residents in those areas to access basic banking services.
The second violation concerned customer service standards. Inspectors found that CSB Bank had levied charges on certain savings accounts without informing customers of those charges upfront.
REGULATORY PROCESS
Following the inspection findings, the RBI issued a show-cause notice to CSB Bank setting out the charges and inviting a formal response. The bank submitted a reply to the notice and made additional submissions. Having considered those submissions in their entirety, the regulator concluded that the charges were sustained and issued the penalty order dated 6 February 2026. The RBI's announcement explicitly clarified that the monetary penalty is imposed for regulatory deficiencies and does not constitute any judgement on the validity or enforceability of the bank's transactions with its customers.
The RBI said the penalty is without prejudice to any other action it may initiate against the bank.