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# RBI Imposes ₹99.3 Lakh Penalty on Jammu and Kashmir Bank for KYC and Ombudsman Compliance Failures
- URL: https://www.theglobalbanker.com/rbi-penalty-jammu-kashmir-bank-99-lakh-kyc-ombudsman-compliance-failures/
- Published: 2025-12-05T18:37:00.000Z
- Updated: 2026-10-02T14:20:18.000Z
- Description: The Reserve Bank of India fined Jammu and Kashmir Bank ₹99.3 lakh on 5 December 2025 for breaches related to the Ombudsman Scheme, customer service, and video-based KYC requirements.
- Author: TGB Editorial Team
- Tags: Regulations, Asia-Pacific, #archive

The Reserve Bank of India announced on 5 December 2025 that, by an order dated 1 December 2025, it had imposed a monetary penalty of ₹99.3 lakh on Jammu and Kashmir Bank Limited following a statutory inspection, with reference to its financial position as on 31 March 2024, that identified regulatory compliance failures across several areas. The penalty, equivalent to approximately ₹0.993 crore, was announced on the same day as separate RBI penalties on several non-banking financial companies and a housing finance company.

In its statement, the RBI attributed the penalty to contravention of section 26A of the Banking Regulation Act, 1949 (failure to transfer eligible amounts to the Depositor Education and Awareness Fund on time) and non-compliance with RBI directions on the Internal Ombudsman Scheme 2018, Customer Service in Banks, and Know Your Customer (KYC), the last relating to its video-based customer identification process (V-CIP). The regulator was explicit that the action was based on deficiencies in regulatory compliance and was not intended to cast doubt on the validity of any transactions the bank had conducted with its customers.

#### SCOPE OF THE COMPLIANCE FAILURES

The complaint-handling lapses were internal: the bank did not escalate certain complaints that its grievance mechanism had partly or wholly rejected to its Internal Ombudsman for a final decision, and did not send customers final letters on the redressal of their complaints, so they were not made aware of their right to approach the Banking Ombudsman. 

The V-CIP failures relate to the bank's video-based customer identification process, which the RBI introduced as a digital alternative to in-person identification: the bank did not have face-matching technology in V-CIP and failed to confirm the economic and financial profile submitted by customers during the process. V-CIP allows banks to open accounts and perform KYC verification remotely using live video interaction. 

The penalty arose from the RBI's statutory inspection of the bank with reference to its financial position as on 31 March 2024, after which the regulator issued a show-cause notice and considered the bank's written and oral submissions before finding the charges sustained.

#### BACKGROUND

Jammu and Kashmir Bank was founded in 1938 and operates primarily in the Union Territory of Jammu and Kashmir and the Union Territory of Ladakh. 

The regulator said the penalty was without prejudice to any other action it may initiate against the bank.