The Reserve Bank of India (RBI) has levied a monetary penalty of Rs 1 lakh on The Ottapalam Co-operative Urban Bank Ltd., Palakkad, Kerala, for non-compliance with directions issued under the Supervisory Action Framework (SAF) and the Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022. The order was issued on September 3, 2025, under provisions of the Banking Regulation Act, 1949.
The action follows an RBI inspection of the bank’s financial position as of March 31, 2024, which revealed that the bank had sanctioned fresh loans carrying risk weights above 100% in violation of SAF guidelines and issued debit cards to certain cash credit accounts.
RBI clarified that the penalty pertains to lapses in regulatory compliance and does not affect the validity of customer transactions or agreements. The central bank may initiate further action, if warranted.