The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 50,000 on The Kallidaikurichi Co-operative Urban Bank Limited, Tamil Nadu, for failing to comply with prudential norms related to capital adequacy for Primary Urban Co-operative Banks (UCBs).

The order, dated November 27, 2025, was issued under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The penalty follows an RBI inspection of the bank's financial position as of March 31, 2024. After supervisory findings indicated non-compliance, the bank was issued a show-cause notice. Upon reviewing the bank's reply and oral submissions, the RBI confirmed that the bank had refunded share capital to its members despite its CRAR being below the regulatory minimum, constituting a breach of capital adequacy norms.

RBI clarified that the penalty pertains solely to regulatory compliance deficiencies and does not impact the validity of customer transactions. The action is also without prejudice to any further regulatory measures that may be initiated against the bank.