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PDF - RBI imposes monetary penalty on The Arakonam Co-operative Urban Bank Limited, Tamil Nadu ()
Date : Dec 18, 2025
RBI imposes monetary penalty on The Arakonam Co-operative Urban Bank Limited, Tamil Nadu

The Reserve Bank of India (RBI) has, by an order dated December 15, 2025, imposed a monetary penalty of ₹2.50 lakh (Rupees Two Lakh Fifty Thousand only) on The Arakonam Co-operative Urban Bank Limited, Tamil Nadu (the bank) for contravention of provisions of Section 17 read with Section 56 of the Banking Regulation Act, 1949 (BR Act) and non-compliance with certain directions issued by RBI on 'Exposure Norms and Statutory / Other Restrictions – UCBs', 'Management of Advances – UCBs' and 'Know Your Customer (KYC)'. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the BR Act.

The statutory inspection of the bank was conducted by RBI with reference to its financial position as on March 31, 2025. Based on supervisory findings of contravention of statutory provisions / non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said provisions and directions. After considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty:

The bank had:

  1. failed to transfer 20% of its net profit for financial years 2022-23, 2023-24 and 2024-25 to the Statutory Reserve;

  2. sanctioned loans in excess of the prescribed regulatory limit to certain nominal members;

  3. sanctioned gold loans under bullet repayment scheme beyond the prescribed regulatory limit;

  4. opened accounts, which were non-compliant with KYC requirements; and

  5. failed to upload the KYC records of customers onto Central KYC Records Registry (CKYCR) within the prescribed timeline.

This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

(Brij Raj)           
Chief General Manager

Press Release: 2025-2026/1732

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