The Rajapalayam Co-operative Urban Bank Ltd

RBI imposed a monetary penalty under section 47A(1)(c) read with section 46(4)(i) and section 56 of the Banking Regulation Act, 1949, after supervisory findings showed non-compliance with directions on ‘Board of Directors - UCBs’, ‘Loans and advances to directors, their relatives, and firms/concerns in which they are interested’, and ‘Exposure Norms and Statutory / Other Restrictions – UCBs’. The sustained charges were that the bank extended loans to relatives of directors and sanctioned loans to nominal members in excess of the prescribed ceiling.

The bank must bear the penalty and the finding signals regulatory non-compliance in its lending and governance controls. The action does not state a restriction on ongoing operations, but RBI may initiate further action separately; the cited lending practices and control weaknesses are the compliance issues to address going forward.