MALAPPURAM/December 15-2020: The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs50 lakh on the Urban Co-operative Bank Ltd, Perinthalmanna, for non-compliance with asset classification norms.
RBI in its statement said the penalty has been slapped on the bank for the failure in adhering to “directions issued by RBI on Income Recognition and Asset Classification (IRAC) norms and on Management of Advances-UCBs.”
It also explained that this penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949.
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 said RBI directions.
On discovering the lapse, 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 came to the conclusion that the charge of non-compliance with the said RBI directions was substantiated, and warranted imposition of monetary penalty,” the RBI elaborated on its move.
The Urban Co-operative Bank Perinthalmanna which was established in 1916 as ‘Aikya Nanaya Samgham’, was upgraded as Urban Bank in 1940.
The bank that came under the Banking Regulation Act in 1966, obtained the Reserve Bank Licence in 1994. In 1991, the operations of the bank with a network of 24 branches, was widened to cover the whole of Malappuram Municipality.