Monetary Penalty on The Lalgudi Co-operative Urban Bank Ltd.
RBI press-release 2026-2027/542 · 25 Jun 2026
Official title
RBI imposes monetary penalty on The Lalgudi Co-operative Urban Bank Ltd., Tamil Nadu
RBI press-release 2026-2027/542 · 25 Jun 2026
Official title
RBI imposes monetary penalty on The Lalgudi Co-operative Urban Bank Ltd., Tamil Nadu
Summary
Check the official recordThe Reserve Bank of India imposes a monetary penalty of ₹1 lakh on The Lalgudi Co-operative Urban Bank Ltd., Tamil Nadu. The bank failed to comply with RBI directions on Prudential Norms on Capital Adequacy for Primary Urban Co-operative Banks. The bank allowed the refund of share capital to members while its Capital to Risk-Weighted Assets Ratio remained below the regulatory minimum. The bank also sanctioned loans without adherence to share linking to borrowing norms. The RBI issued this penalty after a statutory inspection of the bank financial position as of March 31, 2025. The bank received a show cause notice and participated in a personal hearing before the final order.
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June 25, 2026 RBI imposes monetary penalty on The Lalgudi Co-operative Urban Bank Ltd., Tamil Nadu
The Reserve Bank of India (RBI) has, by an order dated June 22, 2026, imposed a monetary penalty of ₹1 lakh (Rupees One Lakh only) on The Lalgudi Co-operative Urban Bank Ltd., Tamil Nadu (the bank) for non-compliance with certain directions issued by RBI on ‘Prudential Norms on Capital Adequacy - Primary (Urban) Co- operative Banks (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:
Despite its CRAR being less than the regulatory minimum, the bank had:
i. allowed the refund of share capital to its members and
ii. sanctioned certain loans without complying with the share linking to borrowings norms.
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: 2026-2027/542 Chief General Manager
प्रेस प्रकाशनी PRESS RELEASE
भारतीय ǐरज़वर् बैंक
RESERVE BANK OF INDIA
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