The Purasawalkam Co-operative Bank Limited, Tamil Nadu

RBI imposed a monetary penalty after supervisory inspection found that the bank had not complied with certain directions issued under 'Prudential Norms on Capital Adequacy - Primary (Urban) Co-operative Banks (UCBs)' and with specific directions under the Supervisory Action Framework (SAF). The sustained charges included allowing refund of share capital to members despite CRAR being below the regulatory minimum, and failing to reduce the single borrower exposure limit for fresh loans and advances by 50% of the applicable regulatory limit as required under SAF. 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 penalty and continue complying with RBI’s capital adequacy and SAF requirements. The order does not state a restriction on operations, but it signals continued supervisory scrutiny and possible further action for similar non-compliance. Members and borrowers are indirectly affected to the extent the bank must tighten exposure and capital-related practices.