The Reserve Bank of India imposed a monetary penalty of ₹61,95,000 on Kotak Mahindra Bank Limited by an order dated 11 December 2025, announced on 19 December 2025, under the Banking Regulation Act 1949 and the Credit Information Companies (Regulation) Act 2005, following a statutory examination that identified compliance failures across three distinct regulatory areas. The RBI set out the basis for the penalty in a formal notice, detailing the specific provisions of its directions that the bank had failed to observe and confirming that the action was taken after the bank was given an opportunity to respond to the regulator's findings.

The RBI identified non-compliance in three categories: failures relating to Basic Savings Bank Deposit accounts, shortcomings under the Business Correspondent framework governing third-party service agents, and the furnishing of inaccurate information on certain borrowers to credit information companies.

THREE REGULATORY AREAS CITED IN FINDING

The BSBD account framework was established by the RBI to promote financial inclusion by providing no-frills banking services to underserved customers. The rules that govern BSBD accounts restrict eligible holders to a single such account, and the RBI found that Kotak Mahindra Bank opened a second BSBD account for certain customers who already held one. The Business Correspondent charge related to an arrangement the bank entered into with BCs for activities not covered within the scope of activities BCs may undertake.

The third charge was that the bank furnished inaccurate information on certain borrowers to credit information companies.

PENALTY SCOPE AND REGULATORY CONTEXT

The RBI said the penalty is imposed without prejudice to any further action the authority may choose to initiate and does not constitute a finding on the validity of individual transactions that Kotak Mahindra Bank's customers have entered into.

Kotak Mahindra Bank is an Indian private sector bank. The December 2025 penalty follows a separate regulatory episode in April 2024, when the RBI barred the bank from onboarding new customers through digital channels after identifying deficiencies in its information technology risk management framework. Those restrictions were lifted in February 2025.