The Arni Co-operative Town Bank Limited, Tamil Nadu

Following a statutory inspection with reference to the bank’s financial position as on March 31, 2024, RBI issued a show-cause notice for supervisory findings of non-compliance. RBI sustained charges that the bank allowed refund of share capital to members despite CRAR being below the regulatory minimum, sanctioned certain loans without complying with the share-linking-to-borrowings norm despite low CRAR, sanctioned loans above the prescribed limit to certain nominal members, and sanctioned gold loans under the bullet repayment scheme beyond the prescribed regulatory limit. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The bank must absorb the monetary penalty and address the compliance gaps identified by RBI. The release does not specify any immediate operational restriction, but RBI notes the action is without prejudice to any other supervisory or enforcement action that may follow.