Mukkuperi Cooperative Urban Bank Fined Rs1.75 Lakh by RBI

Moneylife Digital Team 20 January 2025

Investor Interest

Reserve Bank of India (RBI) has imposed a penalty of Rs1.75 lakh on Mukkuperi Cooperative Urban Bank Ltd from Tamil Nadu for non-compliance with specific directions issued by RBI under the supervisory action framework (SAF), on loans and advances to directors, their relatives and firms or concerns in which they are interested and know-your-customer (KYC).

The statutory inspection of Mukkuperi Cooperative Urban Bank, conducted by RBI with reference to its financial position as of 31 March 2023, revealed several violations. The lender did not adhere to the directions issued under the SAF when it increased its exposure to sectors with high levels of non-performing assets (NPAs).

Additionally, Mukkuperi Cooperative Urban Bank sanctioned loans related to its directors, which is a breach of regulatory norms. It also failed to upload the KYC records of its customers onto the Central KYC Records Registry (CKYCR) within the prescribed timeline.

After considering the lender’s reply to the notice, oral submissions made during the personal hearing and examination of additional submissions made by it, RBI says the charges against Mukkuperi Cooperative Urban Bank are sustained, warranting imposition of monetary penalty.

However, the banking regulator clarified that its action against Mukkuperi Cooperative Urban Bank is based on deficiencies in regulatory compliance and is not intended to pronounce on the validity of any transactions or agreements entered into by the Bank with its customers. Further, imposition of a monetary penalty is without prejudice to any other action that may be initiated against the Bank, RBI added.

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