RBI imposes Monetary Penalty on Bandhan Bank for Regulatory Non-Compliance

The Reserve Bank of India (RBI), through an order dated August 26, 2025, has imposed a monetary penalty of ₹44.70 lakh (Rupees Forty-Four Lakh and Seventy Thousand only) on Bandhan Bank Limited for violations of regulatory provisions.

The penalty was levied for contravention of Section 10(1)(b)(ii) of the Banking Regulation Act, 1949, and for non-compliance with RBI’s directions on Automation of Income Recognition, Asset Classification and Provisioning (IRACP) processes in banks. The action was taken under the powers vested in RBI by Section 47A(1)(c) read with Section 46(4) of the BR Act.

The penalty followed RBI’s Statutory Inspection for Supervisory Evaluation of the bank with reference to its financial position as on March 31, 2024. Based on inspection findings and subsequent correspondence, the central bank issued a show-cause notice to Bandhan Bank, asking why penalty should not be imposed for failure to comply with the prescribed directions.

Why Penalty was imposed?

The penalty was imposed due to following lapses:

• Payment of remuneration in the form of commission to certain employees, in violation of norms; and
• Manual intervention at the back-end in respect of data for certain accounts without capturing audit trails or user-specific access logs in the system.

RBI clarified that the action was taken due to deficiencies in regulatory compliance and does not affect the validity of transactions or agreements entered into by the bank with its customers. The imposition of penalty is also without prejudice to any other supervisory or enforcement action that may be initiated by RBI against the bank.