**Executive Summary**
This press release, dated November 14, 2025, announces that the Reserve Bank of India (RBI) has imposed a monetary penalty of ₹39.60 lakh on Tamilnad Mercantile Bank Limited due to contravention of provisions of the Payment and Settlement Systems Act, 2007 and the Banking Regulation Act, 1949. This decision follows the Statutory Inspection for Supervisory Evaluation (ISE 2024) conducted by RBI with reference to its financial position as on March 31, 2024.
**Key Points / Main Content**
*Monetary Penalty*
* RBI imposed a monetary penalty of ₹39.60 lakh on Tamilnad Mercantile Bank Limited.
*Reasons for Penalty*
* Contravention of section 10A of the Payment and Settlement Systems Act, 2007 (PSS Act).
* Contravention of section 26A of the Banking Regulation Act, 1949 (BR Act).
* The bank indirectly imposed charges on Basic Savings Bank Deposit (BSBD) account holders for making payment using Unified Payments Interface (UPI).
* The bank had not transferred eligible amounts to the Depositor Education and Awareness Fund within the prescribed period.
*Context of the Penalty*
* The penalty was imposed following the Statutory Inspection for Supervisory Evaluation (ISE 2024) with reference to its financial position as on March 31, 2024.
* RBI issued a notice to the bank advising it to show cause as to why the penalty should not be imposed for contravention of the provisions of the said Acts.
* The decision was made after considering the bank's reply to the notice and submissions made during the personal hearing.
*Disclaimer*
* 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.
* The imposition of the monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
**Impact Analysis**
*Tamilnad Mercantile Bank Limited*
* **Impact**: The bank is directly impacted by the monetary penalty of ₹39.60 lakh and is potentially subject to further action by the RBI.
* **Action Required**: The bank must pay the penalty and address the deficiencies in statutory compliance that led to the penalty, specifically regarding charges on BSBD account holders using UPI and transferring eligible amounts to the Depositor Education and Awareness Fund.
*Basic Savings Bank Deposit (BSBD) account holders*
* **Impact**: The bank indirectly imposed charges on Basic Savings Bank Deposit (BSBD) account holders for making payment using Unified Payments Interface (UPI).
* **Action Required**: No Action Required.
*Depositor Education and Awareness Fund*
* **Impact**: The bank had not transferred eligible amounts to the Depositor Education and Awareness Fund within the prescribed period.
* **Action Required**: The bank had to transfer eligible amounts to the Depositor Education and Awareness Fund.
Key Entities Referenced
Reserve Bank of India (RBI): Imposed monetary penalty for contravention of specified acts.
Tamilnad Mercantile Bank Limited: Bank on which monetary penalty was imposed.
Banking Regulation Act, 1949 (BR Act): One of the acts contravened, leading to the monetary penalty.
Payment and Settlement Systems Act, 2007 (PSS Act): One of the acts contravened, leading to the monetary penalty.
Depositor Education and Awareness Fund: Fund that the bank had not transferred eligible amounts to.
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