**Executive Summary**
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹39.60 lakh on Tamilnad Mercantile Bank Limited. The penalty, ordered on November 13, 2025, is for contravention of provisions of section 10A of Payment and Settlement Systems Act, 2007 (PSS Act) and section 26A of the Banking Regulation Act, 1949 (BR Act). This action follows a Statutory Inspection for Supervisory Evaluation (ISE 2024) and related correspondence.
**Key Points / Main Content**
* **Penalty Imposition:**
* RBI imposed a monetary penalty of ₹39.60 lakh on Tamilnad Mercantile Bank Limited.
* The penalty is for contravention of provisions under the Payment and Settlement Systems Act, 2007 and the Banking Regulation Act, 1949.
* **Basis for Penalty:**
* The decision follows the Statutory Inspection for Supervisory Evaluation (ISE 2024) conducted by RBI as of March 31, 2024.
* A notice was issued to the bank, and after considering their response and submissions, the RBI decided to impose the penalty.
* **Specific Charges:**
* The bank indirectly imposed charges on Basic Savings Bank Deposit (BSBD) account holders for making payments using Unified Payments Interface (UPI).
* The bank did not transfer eligible amounts to the Depositor Education and Awareness Fund within the prescribed period.
* **Nature of Action:**
* The action is based on deficiencies in statutory compliance.
* It is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
**Impact Analysis**
**Tamilnad Mercantile Bank Limited**
* **Impact:** Financial penalty of ₹39.60 lakh; Reputational impact due to regulatory action.
* **Action Required:** Ensure compliance with regulatory requirements and rectify the identified deficiencies.
**Basic Savings Bank Deposit (BSBD) account holders**
* **Impact:** Customers may have been subject to inappropriate charges for UPI transactions.
* **Action Required:** No action is required; it is within the bank to rectify this issue.
**Depositor Education and Awareness Fund**
* **Impact:** May not have received the prescribed funds within the specified timeframe.
* **Action Required:** No action is required; it is within the bank to rectify this issue.
Key Entities Referenced
Reserve Bank of India (RBI): Imposing a monetary penalty, indicating its regulatory oversight.
Tamilnad Mercantile Bank Limited: Entity penalized for contravention of regulations.
Payment and Settlement Systems Act, 2007 (PSS Act): Act contravened, leading to the penalty.
Banking Regulation Act, 1949 (BR Act): Act contravened, leading to the penalty.
Depositor Education and Awareness Fund: Fund to which the bank failed to transfer funds.
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
:
www.rbi.org.in/hindi
संचार वर्भाग, केंद्रीय कायाालय, शहीद भगत ससिंह मागा, फोटा, म िंबई - 400 001
Website : www.rbi.org.in Department of Communication, Central Office, Shahid Bhagat Singh Marg, Fort,
ई-मेल/email : helpdoc@rbi.org.in Mumbai - 400 001 फोन/Phone: 022 - 2266 0502
November 14, 2025
RBI imposes monetary penalty on Tamilnad Mercantile Bank Limited
The Reserve Bank of India (RBI) has, by an order dated November 13, 2025,
imposed a monetary penalty of ₹39.60 lakh (Rupees Thirty Nine Lakh Sixty
Thousand only) on Tamilnad Mercantile Bank Limited (the bank) for contravention of
provisions of section 10A of Payment and Settlement Systems Act, 2007 (PSS Act)
and section 26A of the Banking Regulation Act, 1949 (BR Act). This penalty has been
imposed in exercise of powers conferred on RBI under the provisions of section 30(1)
read with section 26(6) of the PSS Act and section 47A(1)(c) read with section
46(4)(i) of the BR Act.
The Statutory Inspection for Supervisory Evaluation (ISE 2024) of the bank was
conducted by RBI with reference to its financial position as on March 31, 2024.
Based on the supervisory findings of contravention of the provisions of PSS Act and
BR Act 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
contravention of the provisions of the said Acts.
After considering the bank’s reply to the notice, additional submissions made by it
and oral submissions made during the personal hearing, RBI found that the following
charges against the bank were sustained, warranting imposition of monetary penalty:
(i) The bank had indirectly imposed charges on Basic Savings Bank Deposit
(BSBD) account holders for making payment using Unified Payments Interface
(UPI); and
(ii) The bank had not transferred eligible amounts to the Depositor Education
and Awareness Fund within the prescribed period.
The action is based on deficiencies in statutory 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 monetary penalty is without prejudice to any
other action that may be initiated by RBI against the bank.
(Brij Raj)
Press Release: 2025-2026/1509 Chief General Manager