PMC Bank Fiasco Effect: RBI mandates Urban Cooperative Banks to do this to prevent more scams

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January 17, 2020 11:57 AM

The central bank has also mentioned that the Urban Cooperative Banks can be penalised if they fail to submit accurate data.

cooperative bank, PMC bank, RBI, reserve bank of india, rbi guidelines, ucb to submit credit information The move is aimed at strengthening offsite supervision and early recognition of financial distress.

After an eye-opening incident of PMC Bank, RBI has now directed Urban Cooperative Banks to submit periodic credit information, including the classification of an account as Special Mention Account (SMA), on all borrowers having aggregate exposure of over Rs 5 crore. The compliance will be applicable for the UCBs having assets over Rs 500 crore by March-end of the previous financial year. The move is aimed at strengthening offsite supervision and early recognition of financial distress. The UCBs will have to share the credit information with the Central Repository of Information on Large Credits (CRILC), which is created by RBI and contains information of scheduled commercial banks, all India financial institutions, and certain non-banking financial companies.

The central bank has also mentioned that the Urban Cooperative Banks can be penalised if they fail to submit accurate data. The information will all fund-based and non-fund based exposure, including investment exposure on the borrower. To detect early signs of stress and initiate remedial actions, mentioning the Special Mention Account (SMA) is also mandatory, which indicates that the account holder is defaulting in the timely payment of his debt obligations.

Sections of CRILC – UCBs return

  • Exposure to Large Borrowers: The bank needs to report the credit information of all borrowers having aggregate exposures of Rs 5 crore and above.
  • Reporting of Technically / Prudentially Written-off Accounts and Section: The bank also needs to report the data on the amount written off, if any, for borrowers whose technically/prudentially written off amount is over Rs 5 crore and which are not reported in Section 1. 
  • Reporting of Balance in Current Account: According to the new directive, the bank needs to report the data on Current Account holders whose balance in the current account as on reporting date is Rs 1 crore and above or sum of all debit or credit transactions during the reporting quarter is Rs 5 crore and above. 

The banks need to submit the data on large exposures within 30 days from the end of the quarter through XBRL reporting platform of RBI. “Now, the UCBs will be required to submit CRILC Report on a quarterly basis with effect from December 31, 2019. Detailed operating instructions will be issued shortly by the Department of Supervision, Reserve Bank of India,” RBI said in its release. 

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