RBI fines Pallikonda Co-operative Urban Bank in Tamil Nadu

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹30,000 on The Pallikonda Co-operative Urban Bank Limited, Tamil Nadu. The penalty was imposed through as per order dated March 9, 2026. 

The penalty has been imposed under the powers granted to RBI under Section 47A(1)(c), read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. According to RBI, the penalty was levied due to non-compliance with certain regulatory directions related to ‘Prudential Norms on Capital Adequacy – Primary (Urban) Co-operative Banks (UCBs)’ and ‘Exposure Norms and Statutory / Other Restrictions – UCBs’. 

RBI Inspection 

The action follows a statutory inspection conducted by the RBI with reference to the bank’s financial position as of March 31, 2025. Based on supervisory findings indicating non-compliance with RBI directions, the central bank issued a notice to the bank asking why a penalty should not be imposed. The bank submitted a reply and also made oral submissions during a personal hearing. Review of the bank’s response led the RBI to conclude that certain charges against the bank were sustained. 

Key Compliance Violations 

RBI stated that the bank had: 

• Allowed the refund of share capital to its members even though its Capital to Risk Weighted Assets Ratio (CRAR) was below the regulatory minimum.
• Sanctioned certain loans without complying with the share-linking-to-borrowings norm while its CRAR remained below the regulatory minimum.
• Sanctioned loans to certain nominal members exceeding the prescribed regulatory limit.