The Reserve Bank of India has imposed, by an order dated December 11, 2020, a monetary penalty of Rs 50.00 lakh on the Urban Co-operative Bank Ltd. No. 1758, Perinthalmanna in Kerala.
The UCB was fined for non-compliance with directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms and on Management of Advances-UCBs.
This penalty has been imposed in exercise of powers vested in RBI under the provisions of laws on the failure of the bank to adhere to the aforesaid directions issued thereon by RBI.
This action is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, clarifies RBI.
The statutory inspection of the bank with reference to its financial position as on March 31, 2019, conducted by RBI, revealed that the bank had not complied with the aforesaid RBI directions. A Notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with the directions issued by RBI.
After considering the bank’s written reply, RBI concluded that the charge of non-compliance with aforesaid RBI directions was substantiated and warranted imposition of monetary penalty.
In a parallel development on the same day, the RBI extended Direction for six months on the Karnala Nagri Sahakari Bank Ltd., Panvel, Raigad, Maharashtra. The UCB was placed under Directions on June 15, 2020.
The Directions shall continue to apply to the bank till June 15, 2021, subject to review. All other terms and conditions of the Directive under reference shall remain unchanged. A copy of the directive dated December 14, 2020 notifying the above extension is displayed at the bank’s premises for the perusal of the public.