Several UCBs in West Bengal under RBI scanner for accounting irregularities

RBI sources say, the monitoring is being done silently for one year and soon action by the apex bank authorities against the erring banks will follow.

Kolkata:At a time when central agencies like the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) are already active in West Bengal investigating various issues like chit fund scam, coal scam, cattle smuggling, and post-poll violence, Reserve Bank India (RBI) has started silently monitoring the activities of the different Urban Cooperative Banks (UCBs) in the state.

According to RBI sources, the monitoring is being done silently for almost one year and soon action by the apex bank authorities against the erring banks will follow. Sources said that during the last one year the apex bank authorities have also taken some penal measures against some erring UCBs.

"However, such action so far are just the tip of the iceberg. For the last one year, we have been silently observing the functioning modalities of a number of UCBs in West Bengal mainly the aspects of capital outflow, accounting practices, and procedural lapses in loan sanction and disbursements. The monitoring process started at the end of September last year. However, we are almost at the end of the process of analyzing our findings and major action against erring UCBs in the state to follow now," said a senior RBI official on condition of anonymity.

He clarified that the action might include major financial penalties or even cancelation of the license. In this regard, it is worth mentioning that although the controlling authorities of UCBs are the state governments concerned, the ultimate supervisory authority of these banks rests with RBI. The apex bank is free to initiate action against UCB in case of irregularities and for that, the central bank does not require the approval of the state government concerned.

Last year, soon after starting this monitoring process, RBI took penal action against some West Bengal- based UCBs. In December last year, the apex bank took penal action against three UCBs, out of which two-were based out of West Bengal.

These two UCBs were Boral Union Co-operative Bank and Khatra People’s Co-operative Bank. The third UCB against which the central bank authorities took penal action was Odisha- based Berhampore Co-operative Urban Bank Limited. The action was taken because of violations of RBI’s regulations.

Again in March 2021, RBI cancelled the license of United Co-operative Bank which is based out of Bagnan under the Uluberia sub-division in Howrah district of West Bengal. The decision was taken following the absence of capital and income prospects of the said UCB.