The Arakonam Co-operative Urban Bank Limited

RBI imposed a monetary penalty after finding that The Arakonam Co-operative Urban Bank Limited had contravened Section 17 read with Section 56 of the Banking Regulation Act, 1949 and had not complied with RBI directions on Exposure Norms and Statutory/Other Restrictions for UCBs, Management of Advances for UCBs, and KYC. The sustained charges included failure to transfer 20% of net profit to the Statutory Reserve for FY 2022-23, 2023-24 and 2024-25; sanctioning loans above the prescribed regulatory limit to certain nominal members; sanctioning gold loans under the bullet repayment scheme beyond the prescribed limit; opening accounts that did not meet KYC requirements; and not uploading customer KYC records to CKYCR within the prescribed timeline. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.

The bank must bear the penalty and remain exposed to any further supervisory or enforcement action RBI may take. The order does not invalidate customer transactions, but it signals continuing compliance scrutiny over reserve transfers, lending practices, and KYC processes.