**Executive Summary**
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹2 lakh on The Arni Co-operative Town Bank Limited, Tamil Nadu, due to non-compliance with certain RBI directions. This action, dated November 27, 2025, is based on the statutory inspection as of March 31, 2024.
**Key Points / Main Content**
* **Penalty Imposition:**
* RBI imposed a monetary penalty of ₹2 lakh on The Arni Co-operative Town Bank Limited.
* The penalty was imposed for non-compliance with RBI directions on prudential norms, exposure norms, and gold loan bullet repayment schemes.
* The penalty is imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
* **Reasons for Penalty:**
* The statutory inspection found non-compliance with RBI directions.
* The bank allowed the refund of share capital to members despite CRAR being less than the regulatory minimum.
* The bank sanctioned certain loans without complying with the share linking to borrowing norms, despite its CRAR being less than the regulatory minimum.
* The bank sanctioned loans exceeding the prescribed regulatory limit to certain nominal members.
* The bank sanctioned gold loans under the bullet repayment scheme beyond the prescribed regulatory limit.
* **Disclaimer:**
* The action is based on deficiencies in regulatory compliance.
* The action 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 does not prejudice any other action that may be initiated by RBI against the bank.
**Impact Analysis**
**The Arni Co-operative Town Bank Limited**
* **Impact:**
* The bank incurs a monetary penalty of ₹2 lakh.
* The bank's reputation may be negatively affected due to non-compliance.
* The bank may face further regulatory action from the RBI.
* **Action Required:**
* Pay the monetary penalty.
* Take corrective measures to address the deficiencies identified by the RBI.
* Improve compliance with RBI directions to avoid future penalties.
**Customers of The Arni Co-operative Town Bank Limited**
* **Impact:**
* The notice clarifies that the penalty does not invalidate transactions between the bank and its customers.
* **Action Required:**
* No direct action is required; however, customers should remain informed about the bank's regulatory compliance.
**Reserve Bank of India (RBI)**
* **Impact:**
* Reinforces its regulatory oversight of cooperative banks.
* Sends a message to other banks regarding compliance with RBI directions.
* **Action Required:**
* Continue monitoring the bank's compliance and take further action if necessary.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank of India, responsible for regulating the banking sector and imposing penalties for non-compliance.
Banking Regulation Act, 1949: Act under which the RBI exercises its powers to impose penalties on banks for non-compliance.
The Arni Co-operative Town Bank Limited, Tamil Nadu: The cooperative bank on which the monetary penalty is imposed.
Section 47A(1)(c): Section of a law read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, under which the penalty was imposed.
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
December 01, 2025
RBI imposes monetary penalty on The Arni Co-operative Town Bank Limited,
Tamil Nadu
The Reserve Bank of India (RBI) has, by an order dated November 27, 2025,
imposed a monetary penalty of ₹2 lakh (Rupees Two Lakh only) on The Arni Co-
operative Town Bank Limited, Tamil Nadu (the bank) for non-compliance with certain
directions issued by RBI on ‘Prudential Norms on Capital Adequacy - Primary
(Urban) Co-operative Banks (UCBs)’, ‘Exposure Norms and Statutory / Other
Restrictions – UCBs’ and ‘Gold Loan – Bullet Repayment – Primary (Urban) Co-
operative Banks (UCBs)’. 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 Banking Regulation Act, 1949.
The statutory inspection of the bank was conducted by RBI with reference to its
financial position as on March 31, 2024. Based on supervisory findings of 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 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:
i) allowed the refund of share capital to its members, despite its CRAR being
less than the regulatory minimum;
ii) sanctioned certain loans without complying with the share linking to
borrowings norm, despite its CRAR being less than regulatory minimum;
iii) sanctioned loans more than the prescribed regulatory limit to certain nominal
members; and
iv) sanctioned gold loans under bullet repayment scheme beyond the prescribed
regulatory limit.
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)
Press Release: 2025-2026/1600 Chief General Manager