The Rajasthan Urban Co-operative Bank Limited, Jaipur with two branches at MI Road and Chandpol, has been imposed a monetary penalty of Rs1.00 lakh (Rupees One Lakh only), by Reserve Bank of India.
The penalty was for violating the RBI directives/guidelines on individual and group exposure ceiling, IRAC norms and window-dressing.
The IRAC (Income Recognition, Asset Classification) norms are an important tool in RBI’s armory to arrive at the true position of a bank’s loan portfolio and also to minimize its deterioration.
Way back in 1991, the first guidelines on IRAC were noticed to Urban Co-operative Banks vide RBI Cir.No.UBD.No.I&L 51/J.1-90/91 dt.
Banks should classify their assets into the following broad groups, viz. –
(i) Standard Assets
(ii) Sub-standard Assets
(iii) Doubtful Assets
(iv) Loss Assets
Yes, like all industries, there is window-dressing in the banking industry too.
An interesting quote here:
Bigger the lie, greater is the probability of it being believed, Hitler’s trusted deputy, Goebbels, had famously stated.
Fudging of Deposits and Advances figures is the window-dressing variant of banking industry. This normal happens during the run-up to the performance appraisal cycle.
