Recorded RBI impact
Fine: Rs 30,000
Monetary penalty · Fresh imposition
Published by RBI
12 Mar 2026
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹30,000 on The Pallikonda Co-operative Urban Bank Limited, Tamil Nadu, for non-compliance with RBI directions relating to prudential norms on capital adequacy and exposure limits for urban co-operative banks. RBI said the bank had allowed refund of share capital even though its CRAR was below the regulatory minimum, sanctioned loans without meeting the share-linking to borrowings requirement, and extended loans to certain nominal members beyond the prescribed limit. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following a statutory inspection and consideration of the bank’s reply and oral submissions.
Why RBI Acted
RBI imposed a monetary penalty under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, after a statutory inspection and supervisory review found non-compliance with RBI directions on ‘Prudential Norms on Capital Adequacy - Primary (Urban) Co-operative Banks (UCBs)’ and ‘Exposure Norms and Statutory / Other Restrictions – UCBs’. The sustained charges included permitting refund of share capital to members despite CRAR being below the regulatory minimum, sanctioning loans without complying with the share-linking to borrowings norm despite low CRAR, and granting loans to certain nominal members in excess of the prescribed regulatory limit.
Operating Impact
The bank must absorb the financial penalty, but the release does not impose any new operating restriction or withdrawal of licence. The forward-looking impact is mainly reputational and compliance-related, with RBI retaining the option to initiate further action if warranted.
Regulatory Basis
- Section 47A(1)(c)
- Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949
Action Facts
- Primary Impact
- Fine: Rs 30,000
- Order Date
- 9 Mar 2026
- Effective From
- 9 Mar 2026
- Entities Affected
- 1
- Entity Role
- Primary
- Entity Type
- Co-operative bank