The Reserve Bank of India (RBl) has imposed, by an order dated 8 November 2021, a monetary penalty of ₹5.00 lakh (Rupees Five Lakh only) on The Nakodar Hindu Urban Co-operative Bank Ltd., Nakodar, Punjab (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 1 July 2015 on ‘Income Recognition, Asset Classification, Provisioning and Other Related Matters – UCBs’. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(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 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.
The inspection report of the bank based on its financial position as of 31 March 2019, revealed, inter alia, non-adherence with/violation of the aforesaid directions, viz., non-identification of NPAs, wrong classification of assets and inadequate provisions made due to the wrong classification of assets. Based on the same, a Notice was issued to the bank advising it to show cause as to why a penalty should not be imposed for violation of the said directions.
After considering the bank's reply and oral submissions made during the personal hearing, RBI came to the conclusion that the aforesaid charges of non-adherence with /violation of RBI directions were substantiated and warranted imposition of monetary penalty.