**Executive Summary**
This press release, dated November 10, 2025, announces that the Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.50 lakh on The Karaikudi Co-operative Town Bank Limited, Tamil Nadu. The penalty, issued on November 06, 2025, is for non-compliance with RBI directions related to capital adequacy and KYC norms. The action is based on a statutory inspection as of March 31, 2024.
**Key Points / Main Content**
* **Monetary Penalty:**
* RBI imposed a penalty of ₹1.50 lakh on The Karaikudi Co-operative Town Bank Limited.
* **Reason for Penalty:**
* Non-compliance with RBI directions on:
* Prudential Norms on Capital Adequacy.
* Know Your Customer (KYC) guidelines.
* **RBI Authority:**
* Penalty imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
* **Basis of Penalty:**
* Statutory inspection conducted on March 31, 2024.
* Failure to comply with RBI directions, as identified through supervisory findings.
* **Specific Violations by the Bank:**
* Allowed the refund of share capital to members despite CRAR being below the regulatory minimum.
* Sanctioned loans without complying with the share linking to borrowings norm, despite CRAR being less than the regulatory minimum.
* Failed to upload KYC records of customers onto the Central KYC Records Registry (CKYCR) within the prescribed timeline.
* **Disclaimer:**
* The action is for regulatory compliance deficiencies only.
* The action does not pronounce on the validity of bank transactions with customers.
* The penalty is without prejudice to further RBI action.
**Impact Analysis**
**The Karaikudi Co-operative Town Bank Limited**
* **Impact**
* Financial impact due to the monetary penalty of ₹1.50 lakh.
* Reputational impact due to non-compliance with RBI directives.
* Need to address and rectify the identified deficiencies to avoid further penalties.
* **Action Required**
* Pay the monetary penalty to RBI.
* Implement corrective measures to address the violations related to capital adequacy and KYC compliance.
* Ensure timely and accurate uploading of KYC records to CKYCR.
**Customers of The Karaikudi Co-operative Town Bank Limited**
* **Impact**
* The press release clarifies that the penalty imposed on the bank does not affect the validity of any transactions or agreements the customers have with the bank.
* **Action Required**
* No direct action is required from customers.
Key Entities Referenced
Reserve Bank of India (RBI): The central bank that imposed the monetary penalty.
Banking Regulation Act, 1949: The Act under which the penalty was imposed, specifically citing sections 47A(1)(c), 46(4)(i) and 56.
The Karaikudi Co-operative Town Bank Limited, Tamil Nadu: The specific bank on which the monetary penalty was imposed.
Prudential Norms on Capital Adequacy - Primary (Urban) Co-operative Banks (UCBs): RBI directions related to capital adequacy for urban cooperative banks.
Know Your Customer (KYC): RBI directions related to customer identification and verification.
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 10, 2025
RBI imposes monetary penalty on The Karaikudi Co-operative Town Bank
Limited, Tamil Nadu
The Reserve Bank of India (RBI) has, by an order dated November 06, 2025,
imposed a monetary penalty of ₹1.50 lakh (Rupees One Lakh Fifty Thousand only) on
The Karaikudi 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)’ 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 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; and
iii. 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)
Press Release: 2025-2026/1479 Chief General Manager