The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 30,000 on The Pallikonda Co-operative Urban Bank Limited, Tamil Nadu, for non-compliance with regulatory directions related to capital adequacy and exposure norms applicable to Urban Co-operative Banks (UCBs).

The penalty, imposed through an order dated March 9, 2026, was levied under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The action follows a statutory inspection conducted by RBI with reference to the bank’s financial position as of March 31, 2025. Based on supervisory findings and subsequent correspondence, RBI issued a show-cause notice to the bank seeking an explanation for the regulatory lapses.

After reviewing the bank’s reply and oral submissions, RBI found that the bank had refunded share capital to members despite its Capital to Risk-Weighted Assets Ratio (CRAR) being below the regulatory minimum, sanctioned certain loans without complying with share linking to borrowings norms, and granted loans to certain nominal members exceeding the prescribed regulatory limits.

RBI clarified that the penalty has been imposed due to deficiencies in 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 stated that the action is without prejudice to any further regulatory measures that may be taken against the bank.