RBI imposed Monetary Penalty on Pusad Urban Co-operative Bank

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs.2.50 lakh on Pusad Urban Co-operative Bank Ltd. of Maharashtra. This penalty was imposed due to non-compliance with the directions issued by RBI on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’.

The RBI’s statutory inspection of the bank’s financial position as of March 31, 2020, as well as an examination of the Inspection Report and all correspondence related thereto, revealed, among other things, that the bank had not followed the Prudential Norms governing Income Recognition, Asset Classification, and Provisioning.

As a result, a notice was sent to the bank, urging it to show cause why a penalty should not be imposed for failing to comply with the aforementioned orders.

After considering the bank’s response to the notice, its additional submissions, and oral submissions made during the personal hearing, the RBI concluded that the charge of non-compliance with the aforementioned RBI directions was supported and warranted the imposition of a monetary penalty on the bank.

This penalty has been imposed in the exercise of powers conferred on RBI under the provisions of section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949.

This action is based on the 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.