**Executive Summary**
This document is a press release from the Reserve Bank of India (RBI) dated December 01, 2025, announcing a monetary penalty of ₹2 lakh imposed on The Arni Co-operative Town Bank Limited, Tamil Nadu, for non-compliance with certain RBI directions. The penalty was ordered on November 27, 2025 and stems from a statutory inspection referencing the bank's financial position 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 order was dated November 27, 2025.
* The penalty is for non-compliance with RBI directions.
* The action is based on deficiencies in regulatory compliance.
* The penalty is imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
* **Basis for Penalty:**
* Statutory inspection of the bank's financial position was conducted as of March 31, 2024.
* The penalty was imposed after considering the bank's reply to a notice and oral submissions.
* RBI found the following charges against the bank were sustained:
* Refund of share capital to members despite CRAR being less than the regulatory minimum.
* Sanction of certain loans without complying with the share linking to borrowings norm, despite CRAR being less than regulatory minimum.
* Sanction of loans exceeding the prescribed regulatory limit to certain nominal members.
* Sanction of gold loans under a bullet repayment scheme beyond the prescribed regulatory limit.
* **Disclaimer:**
* The action is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
* The monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
**Impact Analysis**
**The Arni Co-operative Town Bank Limited, Tamil Nadu**
* **Impact**
* Financial penalty of ₹2 lakh.
* Potential reputational damage.
* Increased scrutiny from RBI.
* **Action Required**
* Pay the monetary penalty.
* Rectify the deficiencies identified by RBI to ensure compliance.
* Implement measures to prevent future non-compliance.
**Customers of The Arni Co-operative Town Bank Limited**
* **Impact**
* The press release specifies that the action is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, so the direct impact on customers is limited.
* **Action Required**
* No direct action required, but customers may want to stay informed about the bank's response to the RBI's findings.
**Reserve Bank of India (RBI)**
* **Impact**
* Enforcement of regulatory compliance in the banking sector.
* Demonstration of its commitment to maintaining the stability of the financial system.
* **Action Required**
* Continue to monitor the bank's compliance with regulatory directions.
* Take further action, if necessary, to address any remaining deficiencies.
Key Entities Referenced
Reserve Bank of India (RBI): The regulator imposing the monetary penalty.
The Arni Co-operative Town Bank Limited, Tamil Nadu: The bank on which monetary penalty is imposed.
Banking Regulation Act, 1949: Act under which powers were conferred to RBI.
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