**Executive Summary**
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1 lakh on The Vaniyambadi Town Co-operative Bank Limited, Tamil Nadu, due to non-compliance with RBI directions under the Supervisory Action Framework (SAF) and Know Your Customer (KYC) guidelines. The penalty was issued on September 29, 2025, following a statutory inspection of the bank's financial position as of March 31, 2024. The press release is dated October 03, 2025.
**Key Points / Main Content**
* **Penalty Imposition:**
* RBI imposed a monetary penalty of ₹1 lakh on The Vaniyambadi Town Co-operative Bank Limited.
* The penalty is for non-compliance with RBI directions under SAF and KYC guidelines.
* The penalty was imposed on September 29, 2025.
* **Basis of Penalty:**
* The decision followed a statutory inspection of the bank as of March 31, 2024.
* A notice was issued to the bank, and their response and submissions were considered.
* The penalty is imposed under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.
* **Specific Violations:**
* The bank sanctioned fresh loans and advances beyond applicable single borrower exposure limits.
* The bank sanctioned fresh loans and advances carrying risk weights more than 100%, in non-adherence to directions issued under SAF.
* The bank failed to upload KYC records of customers onto the Central KYC Records Registry (CKYCR) within the prescribed timeline.
* **Other Considerations:**
* The action is based on regulatory compliance deficiencies.
* The penalty does not pronounce upon the validity of transactions between the bank and its customers.
* The penalty is without prejudice to any other action that RBI may initiate.
**Impact Analysis**
**The Vaniyambadi Town Co-operative Bank Limited**
* **Impact:** The bank faces a monetary penalty of ₹1 lakh and reputational damage.
* **Action Required:** The bank must pay the penalty and take corrective measures to address the identified deficiencies in regulatory compliance.
Key Entities Referenced
Reserve Bank of India (RBI): Imposing a monetary penalty for non-compliance with directions.
Banking Regulation Act, 1949: The Act under which the penalty was imposed, specifically Sections 47A(1)(c), 46(4)(i), and 56.
The Vaniyambadi Town Co-operative Bank Limited, Tamil Nadu: The bank on which the monetary penalty was imposed for non-compliance.
Supervisory Action Framework (SAF): RBI framework under which specific directions were issued to the bank.
Know Your Customer (KYC): RBI directions that the bank 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
October 03, 2025
RBI imposes monetary penalty on The Vaniyambadi Town Co-operative Bank
Limited, Tamil Nadu
The Reserve Bank of India (RBI) has, by an order dated September 29, 2025,
imposed a monetary penalty of ₹1 lakh (Rupees One Lakh only) on The Vaniyambadi
Town Co-operative Bank Limited, Tamil Nadu (the bank) for non-compliance with
specific directions issued by RBI under ‘Supervisory Action Framework (SAF)’ and
certain directions issued by RBI on ‘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) sanctioned certain fresh loans and advances beyond the applicable single
borrower exposure limits and certain fresh loans and advances carrying risk
weights more than 100%, in non-adherence to directions issued under SAF;
and
ii) 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: 2025-2026/1240 Chief General Manager