**Executive Summary**
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹50,000/- on The Salem Urban Co-operative Bank Limited, Tamil Nadu, due to non-compliance with RBI directions on compromise settlements and technical write-offs. The penalty was ordered on December 26, 2025, based on a statutory inspection of the bank's financial position as of March 31, 2025. The penalty is imposed under sections 47A(1)(c), 46(4)(i) and 56 of the Banking Regulation Act, 1949.
**Key Points / Main Content**
* **Penalty Imposition:**
* RBI imposed a monetary penalty of ₹50,000/- on The Salem Urban Co-operative Bank Limited.
* The penalty is for non-compliance with RBI directions on ‘Framework for Compromise Settlements and Technical Write-offs'.
* The order was issued on December 26, 2025.
* **Reason for Penalty:**
* The bank sanctioned non-agricultural loans to members who had previously availed compromise settlements without adhering to the prescribed minimum cooling period.
* This finding was sustained after a statutory inspection of the bank's financial position as of March 31, 2025.
* **Legal Basis:**
* The penalty is imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
* **Clarification:**
* The action is based on deficiencies in regulatory compliance.
* The penalty is not intended to affect the validity of any transaction or agreement entered into by the bank with its customers.
* This penalty does not preclude further action by the RBI against the bank.
**Impact Analysis**
**The Salem Urban Co-operative Bank Limited, Tamil Nadu**
* **Impact:**
* Financial impact of the penalty imposed.
* Potential reputational damage due to non-compliance.
* **Action Required:**
* Pay the monetary penalty.
* Rectify the identified deficiencies in regulatory compliance.
* Ensure adherence to RBI directions on compromise settlements and technical write-offs in the future.
**Bank Members (Loan Applicants)**
* **Impact:**
* Members who were sanctioned loans may be affected.
* **Action Required:**
* No immediate action required from loan applicants.
Key Entities Referenced
Banking Regulation Act, 1949: Act under which penalty was imposed by RBI
Reserve Bank of India (RBI): Regulator imposing the monetary penalty
The Salem Urban Co-operative Bank Limited, Tamil Nadu: Bank on which monetary penalty is imposed
Section 47A(1)(c): Section of an Act, under which penalty was imposed
Framework for Compromise Settlements and Technical Write-offs: RBI directions for non-compliance which the monetary penalty was issued
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 29, 2025
RBI imposes monetary penalty on The Salem Urban Co-operative
Bank Limited, Tamil Nadu
The Reserve Bank of India (RBI) has, by an order dated December 26, 2025,
imposed a monetary penalty of ₹50,000/- (Rupees Fifty Thousand only) on The
Salem Urban Co-operative Bank Limited, Tamil Nadu (the bank) for non-compliance
with certain directions issued by RBI on ‘Framework for Compromise Settlements
and Technical Write-offs’. 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 charge against the bank was sustained,
warranting imposition of monetary penalty:
The bank had sanctioned non-agricultural loans to members, who had previously
availed compromise settlements, without adhering to the prescribed minimum cooling
period.
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: 2025-2026/1789 Chief General Manager