**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. The penalty, ordered on December 26, 2025, is for non-compliance with certain RBI directions regarding compromise settlements and technical write-offs. This action stems from deficiencies found during a statutory inspection conducted with reference to the bank’s financial position as of March 31, 2025.
**Key Points / Main Content**
* **Monetary Penalty:**
* RBI imposed a penalty of ₹50,000 on The Salem Urban Co-operative Bank Limited.
* **Reason for Penalty:**
* Non-compliance with RBI directions on 'Framework for Compromise Settlements and Technical Write-offs'.
* The bank had sanctioned non-agricultural loans to members, who had previously availed compromise settlements, without adhering to the prescribed minimum cooling period.
* **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.
* **Inspection:**
* A statutory inspection of the bank's financial position was conducted by RBI as of March 31, 2025.
* **Notice and Hearing:**
* The bank was issued a notice to show cause regarding the penalty.
* RBI considered the bank's reply and oral submissions during a personal hearing.
* **Disclaimer:**
* The action is based on regulatory compliance deficiencies.
* The penalty doesn't impact the validity of transactions between the bank and its customers.
* It does not prejudice any other action that RBI may initiate against the bank.
* **Press Release Date:**
* December 29, 2025.
**Impact Analysis**
**The Salem Urban Co-operative Bank Limited**
* **Impact:**
* Financial: The bank will incur a monetary penalty of ₹50,000.
* Reputational: Potential negative impact on the bank's reputation due to regulatory non-compliance.
* **Action Required:**
* Pay the monetary penalty.
* Address the deficiencies in regulatory compliance related to compromise settlements and technical write-offs.
* Ensure adherence to RBI directions and prescribed cooling periods for future loan sanctions.
**Bank Customers**
* **Impact:**
* None: The action is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.
* **Action Required:**
* None.
**RBI**
* **Impact:**
* Enforces regulatory compliance in the banking sector.
* Upholds the integrity of the banking system.
* **Action Required:**
* Monitor the bank's compliance with corrective measures.
* Reserve the right to initiate further actions against the bank, if necessary.
Key Entities Referenced
Reserve Bank of India (RBI): The regulator imposing the monetary penalty.
Banking Regulation Act, 1949: The act under which penalty is imposed.
The Salem Urban Co-operative Bank Limited, Tamil Nadu: The bank on which monetary penalty is imposed.
Section 47A(1)(c): Section of the Banking Regulation Act under which the penalty is imposed
Framework for Compromise Settlements and Technical Write-offs: RBI guidelines that The Salem Urban Co-operative Bank Limited, Tamil Nadu failed to comply with.
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