The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 50,000 on The Salem Urban Co-operative Bank Limited, Tamil Nadu, for non-compliance with RBI directions on the ‘Framework for Compromise Settlements and Technical Write-offs’.

The penalty was levied through an order dated December 26, 2025, in exercise of powers conferred under Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949. The action followed a statutory inspection conducted by RBI with reference to the bank’s financial position as on March 31, 2025.

Based on supervisory findings, RBI issued a show-cause notice to the bank seeking an explanation for the observed non-compliance. After considering the bank’s written reply and oral submissions during a personal hearing, the central bank concluded that the violation warranted the imposition of a monetary penalty.

According to RBI, the bank had sanctioned non-agricultural loans to members who had earlier availed compromise settlements, without adhering to the prescribed minimum cooling-off period, in contravention of regulatory guidelines.

The RBI clarified that the penalty is based on deficiencies in regulatory compliance and does not amount to a judgment on the validity of any transaction or agreement entered into by the bank with its customers. The action is without prejudice to any further measures that may be initiated by the central bank against the bank.