RBI Imposes Rs1.50 Lakh Penalty on Mettupalayam Cooperative Urban Bank
Moneylife Digital Team 14 November 2025
Reserve Bank of India (RBI) has imposed a penalty of Rs1.50 lakh on the Tamil Nadu-based Mettupalayam Cooperative Urban Bank for non-compliance with RBI directions. The violations pertain to rules governing loans and advances to directors, their relatives and firms or concerns connected to them, as well as exposure norms and other statutory restrictions applicable to urban cooperative banks (UCBs).
 
RBI’s statutory inspection revealed that Mettupalayam Cooperative Urban Bank had sanctioned director-related loans and had also granted loans to nominal members beyond the prescribed regulatory limit.
 
After considering Mettupalayam Cooperative Urban Bank's reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI says the charges against the lender are sustained, warranting the imposition of a monetary penalty.
 
However, the banking regulator clarified that its action against Mettupalayam Cooperative Urban Bank is based on deficiencies in regulatory compliance and is not intended to pronounce on the validity of any transactions or agreements entered into by the Bank with its customers. Further, imposition of a monetary penalty is without prejudice to any other action that may be initiated against the Bank, RBI added.
 
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