Mumbai: The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 63.60 lakh on public sector lender Bank of Baroda (BoB) for failing to comply with regulatory directions related to the Fair Practices Code for Lenders and Know Your Customer (KYC) norms. The action follows the central bank’s supervisory assessment, which identified deficiencies in the bank’s lending and customer due diligence practices.
According to an official statement issued by the RBI, the penalty was levied after it was found that Bank of Baroda had charged interest rates in certain loan accounts that were higher than those contractually agreed upon with customers. The regulator viewed this as a violation of the Fair Practices Code, which requires banks to maintain transparency and fairness while dealing with borrowers and to strictly adhere to the terms of loan agreements.
In addition to the irregularities in interest charging, the RBI also found that the bank had failed to upload the KYC records of certain customers to the Central KYC Records Registry (CKYCR) within the stipulated timeline. The CKYCR is a centralized repository established to facilitate the sharing and verification of customer KYC information across regulated financial institutions, thereby reducing duplication and strengthening compliance standards.
The central bank said these shortcomings came to light during the Inspection for Supervisory Evaluation (ISE 2025) conducted with reference to the bank’s financial position as on March 31, 2025. Following the inspection, the RBI issued a show-cause notice to Bank of Baroda, asking the lender to explain why regulatory action should not be initiated against it.
After examining the bank’s response and reviewing the available records, the RBI concluded that the charges were substantiated and warranted the imposition of a monetary penalty. The regulator clarified that the action was based on deficiencies in regulatory compliance and was not intended to comment on the validity of any individual transaction or agreement entered into by the bank with its customers.
