SRINAGAR: The Reserve Bank of India imposed smaller monetary penalties on banks in 2025 even as the number of enforcement actions rose, with Jammu and Kashmir Bank emerging as the single largest recipient of fines during the year, a Mint analysis has shown.
According to the analysis, the RBI levied penalties in 38 instances in 2025, up from 30 in 2024 and 26 in 2023. However, the overall quantum of fines declined. Total penalties imposed on banks this year stood at Rs 25.5 crore, compared with Rs 29.5 crore in 2024 and Rs 53.3 crore in 2023. The median fine in 2025 dropped sharply to Rs 55.7 lakh, almost half of the Rs 98.2 lakh median in 2024 and well below the Rs 1 crore median recorded in 2023.
The penalties in 2025 cut across public sector banks, private lenders, foreign banks, small finance banks and payments banks, indicating that regulatory scrutiny remained broad-based despite the reduction in amounts.
Within this overall trend of lower fines, Jammu and Kashmir Bank stood out. The RBI imposed the largest cumulative penalty of the year on the bank, totalling about Rs 4.3 crore, spread across two tranches. In January, the regulator fined the bank Rs 3.3 crore for multiple compliance lapses, including allowing basic savings deposit account holders to open regular savings accounts and sanctioning a working capital loan against receivables in the form of government subsidies, among other violations.
A second penalty of Rs 99.3 lakh was imposed in December after the RBI found that the bank had failed to escalate certain customer complaints, which were partly or wholly rejected by its internal grievance redress mechanism, to the internal ombudsman for a final decision. The bank was also penalised for not issuing final letters to customers regarding the redressal of their complaints.
An email sent to the RBI seeking comment on the overall penalty framework remained unanswered, Mint reported.
Vivek Iyer, partner and national leader for financial services risk advisory at Grant Thornton Bharat, told Mint that the RBI does not follow a publicly disclosed framework for determining fines. “They are based on what will drive seriousness and are usually levied to set an example,” he said. Iyer added that penalties are never the regulator’s first response and are typically preceded by a show-cause notice and a review of the bank’s reply. When the response is found wanting, a monetary penalty follows, sending a strong signal to the boards of financial institutions.
He said the central bank is currently adopting a more consultative posture and cannot be seen as imposing ever-higher fines at a time when the government is emphasising deregulation and optimum regulation. “This shows that the RBI will engage with an entity, but its tolerance for non-compliance is still the same,” Iyer said.
Sanjay Agarwal, senior director at Care Ratings, said banks are increasingly investing in compliance systems to avoid regulatory action. “They are using technology and hiring more people in compliance functions to be on the right side of the regulator,” he told Mint. He added that sustained regulatory pressure and high fines in earlier years appear to be yielding results, with banks now more aware of regulatory expectations than ever before.
The RBI, meanwhile, has also sought to improve regulatory clarity. Former deputy governor M Rajeshwar Rao said in August that the central bank has begun including examples, frequently asked questions and illustrations in its regulations to help regulated entities better understand compliance requirements.
While the overall penalty amounts have declined, the case of Jammu and Kashmir Bank underscores that the RBI continues to act firmly in instances of repeated or material non-compliance, even as it recalibrates the scale of monetary sanctions.
