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The Kulithalai Co-operative Urban Bank Ltd

Co-operative bankKulithalai, Tamil Nadu

The RBI action, regulatory basis, and operating impact linked to this entity.

Recorded RBI impact

Fine: Rs 1.00 L

Monetary penalty · Fresh imposition

S1

Published by RBI

5 Dec 2024

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.

Why RBI Acted

Lending normsCapital & exposure normsReporting & disclosure

RBI imposed a monetary penalty after a statutory inspection found that the bank had not complied with specific RBI directions. The sustained charges included offering deposit interest rates higher than State Bank of India’s rates, sanctioning loans beyond the eligible single borrower exposure limit, sanctioning fresh loans and advances other than loans against collateral security of term deposits under SAF, and allowing refund of share capital to members despite the bank’s last assessed CRAR being below the regulatory minimum of 9%. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

Operating Impact

The bank must absorb the monetary penalty and remain subject to RBI supervision; the order does not by itself invalidate customer transactions, but it underscores ongoing compliance obligations around lending limits, deposit pricing, and capital maintenance. RBI also stated that the penalty is without prejudice to any other action it may initiate.

Regulatory Basis

  • Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949

Action Facts

Primary Impact
Fine: Rs 1.00 L
Order Date
4 Dec 2024
Effective From
4 Dec 2024
Entities Affected
1
Entity Role
Primary
Entity Type
Co-operative bank