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

Case Brief

The Reserve Bank of India imposed a monetary penalty of ₹1,00,000 on The Kulithalai Co-operative Urban Bank Ltd., Tamil Nadu, following a statutory inspection and subsequent show-cause process. RBI said the bank failed to comply with directions under the Supervisory Action Framework (SAF) and directions relating to the issue and regulation of share capital and securities for primary urban co-operative banks. The sustained violations included charging deposit rates above SBI’s rates, sanctioning loans beyond the single borrower exposure limit, extending fresh loans and advances other than loans against collateral security of term deposits, and permitting refund of share capital even though its last assessed CRAR was below the regulatory minimum of 9%. The penalty was imposed under the Banking Regulation Act, 1949.