Rs 41 Lakh Penalty On Bandhan Bank, Rs 80,000 On Muthoot Housing

By Samira Vishwas On Apr 25, 2026

In a fresh regulatory action, the Reserve Bank of India (RBI) has imposed monetary penalties on Bank and Muthoot Housing Finance Company for non-compliance with key regulatory norms.

₹41.8 Lakh Penalty on Bank

The RBI has levied a penalty of ₹41.8 lakh on Bank following lapses identified during supervisory inspections. The central bank flagged multiple compliance failures, including violations related to Know Your Customer (KYC) norms.

Additionally, the bank failed to conduct periodic reviews of risk categorisation for certain accounts and sanctioned loans involving directors, which raised governance concerns.

These lapses highlight gaps in internal monitoring systems and adherence to regulatory frameworks.

Action Against Muthoot Housing Finance

Alongside Bank, RBI also imposed a penalty of ₹80,000 on Muthoot Housing Finance Company. The action was taken due to non-compliance with the regulator’s “Fair Practice Code,” which governs transparency and customer dealings in the housing finance sector.

Though the penalty amount is relatively small, it signals RBI’s strict stance on even minor deviations from prescribed norms.

RBI’s Message: Zero Tolerance on Compliance Failures

The penalties reinforce RBI’s ongoing focus on strengthening compliance, governance, and risk management across financial institutions. Such actions are part of routine supervisory mechanisms aimed at ensuring banks and NBFCs operate within regulatory boundaries.

Importantly, RBI clarified that these penalties are based on deficiencies in regulatory compliance and do not impact the validity of customer transactions or agreements.

What It Means for the Banking Sector

This development serves as a reminder for banks and financial institutions to tighten internal controls, especially around KYC, risk assessment, and governance practices.

For investors and customers, while such penalties may raise short-term concerns, they also reflect a proactive regulatory environment working to maintain trust and stability in India’s financial system.