The Reserve Bank of India (RBI), in an order dated September 29, 2025, has levied a monetary penalty of Rs 1 lakh on The Vaniyambadi Town Co-operative Bank Ltd., Tamil Nadu for non-compliance with RBI’s Supervisory Action Framework (SAF) directions and KYC regulations. The penalty was imposed under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

The RBI’s inspection, based on the bank’s financial position as of March 31, 2024, found lapses, and a show-cause notice was issued. After considering the bank’s reply and oral submissions, RBI found that the bank had:

Sanctioned certain loans beyond single borrower exposure limits and some carrying risk weights over 100%, violating SAF directions; and

Failed to upload customer KYC records to the Central KYC Records Registry (CKYCR) within the prescribed timeline.

RBI clarified that the action pertains solely to regulatory compliance deficiencies and does not affect the validity of any transactions or agreements. The penalty is without prejudice to any further action RBI may take against the bank.