The Reserve Bank of India (RBI) has imposed a Rs 8 lakh monetary penalty on The Sambalpur District Co-operative Central Bank Limited, Odisha, for violating provisions of the Banking Regulation Act, 1949, and failing to comply with certain Know Your Customer (KYC) directions.

The penalty follows a statutory inspection conducted by the National Bank for Agriculture and Rural Development (NABARD) based on the bank's financial position as of March 31, 2025. During the inspection, RBI found that the bank had failed to transfer eligible unclaimed deposits to the Depositor Education and Awareness Fund (DEAF) within the stipulated timeline and had not put in place a system for the periodic review of customers' risk categorisation.

RBI clarified that the penalty has been imposed due to deficiencies in statutory and regulatory compliance and does not question the validity of any transactions or agreements entered into by the bank with its customers. The central bank also noted that the action is without prejudice to any further regulatory measures that may be initiated against the bank.