RBI imposes monetary penalty on The Periyakulam Co-operative Urban Bank Ltd., Tamil Nadu

Case Brief

RBI, by order dated November 25, 2024, imposed a monetary penalty of ₹2,00,000 on The Periyakulam Co-operative Urban Bank Ltd., Tamil Nadu. The penalty followed a statutory inspection and subsequent show-cause process in which RBI found sustained breaches of directions issued under the Supervisory Action Framework (SAF), directions on issue and regulation of share capital and securities for primary (urban) co-operative banks, and prudential norms on capital adequacy. The specific lapses included sanctioning loans beyond the eligible single borrower exposure limit, sanctioning fresh loans and advances carrying risk weights above 100%, offering deposit interest rates higher than those offered by State Bank of India, refunding share capital to members despite CRAR being below the regulatory minimum of 9%, and not adhering to share-linking norms in respect of jewel loans. RBI stated that the penalty is based on regulatory non-compliance and does not pronounce on the validity of customer transactions.