**Summary:**
On September 3, 2025, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹1,00,000 (One Lakh Rupees) on The Ottapalam Cooperative Urban Bank Ltd., Palakkad, Kerala, for non-compliance with specific directions issued under the Supervisory Action Framework (SAF) and certain directions outlined in the 'Master Direction – Credit Card and Debit Card Issuance and Conduct Directions, 2022.'
The penalty was imposed under the powers vested in RBI by Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949, following a statutory inspection of the bank's financial position as of March 31, 2024. The RBI's findings revealed that the bank (i) sanctioned fresh loans and advances carrying risk weights of more than 100, in non-adherence to directions issued under SAF; and (ii) issued debit cards to certain cash credit accounts. The bank was subsequently issued a show-cause notice, and its response and oral submissions were considered before the penalty was levied.
The RBI clarified that this action is based on deficiencies in regulatory compliance and does not reflect on the validity of any transactions or agreements between the bank and its customers. The imposition of the monetary penalty is without prejudice to any other action that the RBI may initiate against the bank.
For further information, contact the Department of Communication, Central Office, Reserve Bank of India, Shahid Bhagat Singh Marg, Fort, Mumbai – 400 001, or email helpdoc@rbi.org.in. Phone: 022-2266-0502. Additional details can be found on the RBI website: www.rbi.org.in.
Key Entities Referenced
Reserve Bank of India: The central bank of India, also known as RBI.
The Ottapalam Cooperative Urban Bank Ltd., Palakkad, Kerala: A cooperative urban bank located in Palakkad, Kerala, which was penalized by the RBI.
Palakkad, Kerala: The district and state in India where The Ottapalam Cooperative Urban Bank is located.
Supervisory Action Framework: A framework (SAF) under which the RBI issued directions with which the bank did not comply.
Master Direction Credit Card and Debit Card lssuance and Conduct Directions, 2022: RBI directions regarding the issuance and conduct of credit and debit cards.
Banking Regulation Act, 1949: An act of parliament in India that empowers the RBI to regulate banks.
Section 47A1c read with Sections 464i and 56 of the Banking Regulation Act, 1949: The specific section of the Banking Regulation Act, 1949 under which the penalty was imposed.
Puneet Pancholy: Chief General Manager who released the press release.
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
September 09, 2025
RBI imposes monetary penalty on The Ottapalam Co-operative Urban
Bank Ltd., Palakkad, Kerala
The Reserve Bank of India (RBI) has, by an order dated September 03, 2025,
imposed a monetary penalty of ₹1.00 lakh (Rupees One Lakh only) on The
Ottapalam Co-operative Urban Bank Ltd., Palakkad, Kerala (the bank) for non-
compliance with specific directions issued by RBI under ‘Supervisory Action
Framework (SAF)’ and non-compliance with certain directions issued by RBI on
'Master Direction - Credit Card and Debit Card - lssuance and Conduct Directions,
2022’. 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) sanctioned fresh loans and advances carrying risk weights of more than
100%, in non-adherence to directions issued under SAF; and
ii) issued debit cards to certain cash credit accounts.
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.
(Puneet Pancholy)
Press Release: 2025-2026/1058 Chief General Manager