RBl imposes Rs 5 lakh penalty on National Urban Co-operative Bank

The Reserve Bank of India (RBI), on Monday, imposed a monetary penalty of Rs 5 lakh on National Urban Co-operative Bank ltd. for non-compliance with the banking regulator’s certain provisions.

The banking regulator, in a statement, said that it “has imposed, by an order dated August 22, 2022, a monetary penalty of Rs 5.00 lakh (Rupees Five Lakh only) on the National Urban Co-operative Bank Limited, Pratapgarh, Uttar Pradesh (the bank) for non-compliance with certain directions issued by RBI contained in the Master Circular DCBR.BPD. (PCB) MC No.12/09.14.000/2015-16 dated July 01, 2015, on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’.”

RBI also revealed that the penalty has been imposed in the exercise of its powers under Section 47 A (1) (c) read with Section 46 (4) (i) and Section 56 of the Banking Regulation Act, 1949, taking into account the failure of the bank to adhere to the aforesaid directions issued by the regulator.

Moreover, it should be noted that 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 entity with its customers.

RBI further stated that the inspection report of the bank, based on its financial position as on March 31, 2020, revealed a failure to identify certain accounts as non-performing assets.

Based on the same, a notice was issued to the bank advising it to show cause as to why a penalty shouldn’t be imposed for violation of the said directions.

The banking regulator, after considering the bank's reply to the notice and submissions made, came to the conclusion that the aforesaid charge of non-adherence/violation of RBI directions was substantiated and warranted the imposition of a monetary penalty.