Recorded RBI impact
Fine: Rs 1.00 L
Monetary penalty · Fresh imposition
Published by RBI
25 Jun 2026
Case Brief
RBI imposed a monetary penalty of ₹1 lakh on The Lalgudi Co-operative Urban Bank Ltd., Tamil Nadu, following a statutory inspection as of March 31, 2025. RBI said the bank had failed to comply with certain directions on prudential norms on capital adequacy for Primary (Urban) Co-operative Banks, including allowing refund of share capital to members and sanctioning certain loans without adhering to share-linking-to-borrowings norms, even though its CRAR was below the regulatory minimum. The penalty was issued under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
Why RBI Acted
RBI imposed a monetary penalty after its statutory inspection found that the bank had not complied with certain directions issued under the prudential norms on capital adequacy for Primary (Urban) Co-operative Banks. The sustained charges included that, despite its CRAR being below the regulatory minimum, the bank allowed refund of share capital to its members and sanctioned certain loans without complying with the share-linking to borrowings norms. 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 penalty and may face further RBI action; the release does not impose any new operational restriction. The findings may affect the bank’s compliance posture and supervisory relationship, but the immediate forward-looking consequence is limited to the ₹1 lakh monetary penalty.
Regulatory Basis
- Section 47A(1)(c)
- Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 1.00 L
- Order Date
- 22 Jun 2026
- Effective From
- 22 Jun 2026
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank