The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1 lakh on the Kovilpatti Co-operative Urban Bank Limited, Tamil Nadu, for non-compliance with RBI directions on Prudential Norms on Capital Adequacy applicable to Primary (Urban) Co-operative Banks.
The penalty was imposed through an order dated December 10, 2025, under the powers conferred on RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
The action followed a statutory inspection conducted by RBI with reference to the bank’s financial position as on March 31, 2025. Based on supervisory findings, RBI issued a show-cause notice to the bank for regulatory non-compliance. After examining the bank’s written response and oral submissions during a personal hearing, RBI concluded that the violations were established.
RBI found that the bank had refunded share capital to its members and sanctioned certain loans without adhering to share-linking norms, despite its Capital to Risk-Weighted Assets Ratio (CRAR) being below the prescribed minimum.