The Reserve Bank of India (RBI) has fined Kotak Mahindra Bank ₹61.95 lakh for failing to comply with vital banking regulations.
The order, dated 11 December 2025, follows an inspection of the bank’s financial position as of March 2024. The central bank identified lapses in managing Basic Savings Bank Deposit (BSBD) accounts and the reporting of borrower data to credit information companies.
Additionally, the bank was found to have exceeded the permitted scope of activities for its business correspondents. While the penalty addresses statutory failures, the RBI noted that it does not affect the validity of individual customer transactions or existing agreements.
Financial Inclusion
The primary violations involved the mismanagement of BSBD accounts, which are essential tools for financial inclusion. These zero-balance accounts are designed to help economically weaker sections access formal banking services without the burden of minimum balance requirements.
However, the RBI found that the bank opened multiple BSBD accounts for individuals who already held such accounts, violating the one-account-per-person rule.
Furthermore, the bank allowed its business correspondents in rural areas to perform tasks outside their regulated scope. Such actions compromise the standardised oversight required to protect vulnerable consumers who rely on these intermediaries for their daily financial needs.
Reporting Failures
A significant portion of the penalty relates to the bank’s failure to maintain accurate records with credit information companies. The RBI discovered that the lender provided incorrect data regarding certain borrowers, which directly impacts their credit scores and future loan eligibility.
In today’s economy, a person’s credit history is their financial identity; inaccurate reporting can lead to long-term hurdles for innocent citizens. The central bank issued a show-cause notice and finalised the ₹61.95 lakh penalty after reviewing the bank’s written and oral submissions.
This enforcement action highlights a broader regulatory push to ensure that large private lenders prioritise administrative precision and customer data protection.
The Logical Indian’s Perspective
At The Logical Indian, we believe that trust is the foundation of the relationship between a bank and its patrons. When a major institution falters on rules meant to protect basic savers or reports inaccurate data, it undermines the financial security of the common person.
We support the monetary penalty by RBI as a necessary step toward corporate accountability. No bank, regardless of its size, should be allowed to overlook protocols that safeguard the rights of everyday citizens. True progress must be rooted in transparency and a commitment to serving all sections of society fairly.
