**Executive Summary**
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1.50 lakh on The Mettupalayam Co-operative Urban Bank Limited, Tamil Nadu, due to non-compliance with RBI directions related to loans/advances to directors and exposure norms, based on its financial position as of March 31, 2025. This order was issued on November 11, 2025.
**Key Points / Main Content**
* **Penalty Imposition:**
* RBI imposed a monetary penalty of ₹1.50 lakh on The Mettupalayam Co-operative Urban Bank Limited.
* **Reason for Penalty:**
* The penalty is for non-compliance with RBI directions on:
* Loans and advances to directors, their relatives, and firms/concerns in which they are interested.
* Exposure Norms and Statutory/Other Restrictions – UCBs.
* **Authority and Legal Basis:**
* The penalty was imposed under the powers conferred on RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
* **Background:**
* RBI conducted a statutory inspection of the bank with reference to its financial position as of March 31, 2025.
* The penalty followed a notice issued to the bank regarding non-compliance.
* After considering the bank's response and oral submissions, RBI sustained the charges.
* **Specific Findings:**
* The bank had sanctioned:
* Director related loans.
* Loans to nominal members exceeding the prescribed regulatory limit.
* **Clarifications:**
* The action is based on deficiencies in regulatory compliance.
* It does not affect the validity of transactions between the bank and its customers.
* The penalty does not preclude further actions by RBI.
**Impact Analysis**
**The Mettupalayam Co-operative Urban Bank Limited**
* **Impact:** Financial penalty of ₹1.50 lakh and reputational damage due to non-compliance with RBI directives.
* **Action Required:** Pay the penalty and implement corrective measures to address the identified deficiencies in lending practices and regulatory compliance to prevent future penalties.
Key Entities Referenced
Reserve Bank of India (RBI): Imposed a monetary penalty for non-compliance.
The Mettupalayam Co-operative Urban Bank Limited, Tamil Nadu: Entity on which monetary penalty was imposed.
Banking Regulation Act, 1949: Law under which penalty was imposed. Specific sections 47A(1)(c), 46(4)(i), and 56 were referenced.
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भारतीय ररज़र्व बैंक
RESERVE BANK OF INDIA
वेबसाइट
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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 13, 2025
RBI imposes monetary penalty on The Mettupalayam Co-operative Urban Bank
Limited, Tamil Nadu
The Reserve Bank of India (RBI) has, by an order dated November 11, 2025,
imposed a monetary penalty of ₹1.50 lakh (Rupees One Lakh Fifty Thousand only)
on The Mettupalayam Co-operative Urban Bank Limited, Tamil Nadu (the bank) for
non-compliance with certain directions issued by RBI on ‘Loans and advances to
directors, their relatives, and firms /concerns in which they are interested’ and
‘Exposure Norms and Statutory / Other Restrictions – 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, 2025. 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) sanctioned director related loan; and
ii) sanctioned loans to nominal members more than 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: 2025-2026/1497 Chief General Manager