The Periyakulam Co-operative Urban Bank Ltd., Tamil Nadu

On the basis of a statutory inspection with reference to the bank’s financial position as on March 31, 2023, RBI found that The Periyakulam Co-operative Urban Bank Ltd. had not complied with directions issued under the Supervisory Action Framework (SAF), directions on issue and regulation of share capital and securities for primary (urban) co-operative banks, and prudential norms on capital adequacy. The sustained charges included sanctioning loans beyond the eligible single borrower exposure limit, sanctioning fresh loans and advances carrying risk weights above 100%, offering deposit interest rates higher than those of State Bank of India in contravention of SAF directions, refunding share capital to members despite CRAR being below the regulatory minimum of 9%, and failing to adhere to share-linking norms in respect of jewel loans. RBI imposed the penalty 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 failures identified by RBI. The order does not itself impose a new operational restriction, but the findings may prompt further supervisory or enforcement action if lapses persist. Depositors and borrowers are indirectly affected through the bank’s need to tighten lending, capital, and product-compliance practices.