The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1 lakh on The Lalgudi Co-operative Urban Bank Ltd., Tamil Nadu, for violating prudential norms on capital adequacy applicable to Urban Co-operative Banks.

The RBI found that despite the bank's Capital to Risk-Weighted Assets Ratio (CRAR) remaining below the regulatory minimum, it refunded share capital to members and sanctioned certain loans without complying with share-linking to borrowings norms.

The central bank clarified that the penalty relates only to regulatory compliance deficiencies and does not affect the validity of any customer transactions or agreements.