The Reserve Bank of India (RBI) fined Kotak Mahindra Bank ₹61.95 lakh because the bank did not fully follow some banking rules. During an inspection of the bank’s operations (based on its status as of March 31, 2024), the RBI found a few problems:
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Multiple basic accounts: The bank opened more than one Basic Savings Bank Deposit (BSBD) account for some customers, even though the rules allow only one such account per person.
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Business correspondents overstepping limits: The bank allowed its business correspondents (agents who provide basic banking services) to do activities that were not permitted under RBI rules.
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Wrong credit information: The bank shared incorrect details about some borrowers with credit information companies.
The RBI gave Kotak Mahindra Bank a chance to explain itself by sending a show-cause notice (a formal warning asking why action should not be taken). The bank replied and also provided extra information.
After carefully reviewing the bank’s explanation, the RBI decided that the problems were real and had not been satisfactorily resolved. Because the violations were confirmed, the RBI felt it was right to impose a financial penalty on the bank. The penalty was officially ordered on December 11, 2025.
The RBI also clarified that the fine is only for rule violations. It does not mean that the bank’s customer transactions or agreements are invalid In short, Kotak Mahindra Bank broke some regulatory rules, so the RBI fined it, but customers don’t need to worry about their accounts or contracts being affected.
