The exposure to HDIL group was camouflaged/misreported to RBI and have since been classified as NPAs by the RBI, requiring huge provisioning to be made as per RBI instructions, and this resulted in a steep deterioration in the financials of the bank, the Finance Ministry added.
It said that banking functions of cooperative banks are regulated by the RBI under the Banking Regulation Act, 1949 and the apex bank conducts statutory inspection of Urban Cooperative Banks (UCBs) under section 35 of BR Act, 1949.
Meanwhile, based on a complaint filed by the bank against its officials and borrowers associated with the fraud/financial irregularities in the bank and manipulation of its books of accounts, the Economic Offences Wing of Maharashtra Police has started its investigations into the matter. Forensic auditors have been appointed to look into the related transactions.
The RBI has issued various circulars and guidelines relating to frauds. These include instructions relating to audit, cyber security, early detection and reporting etc.
The RBI has also informed that as per the provisions of Deposit Insurance iamp; Credit Guarantee Corporation (DICGC) Act, 1961, the DICGC provides insurance for bank deposits upto Rs 1 lakh per depositor. Banks are required to maintain 1 per cent higher Capital to Risk-Weighted Assets Ratio (CRAR) than the Basel III norms framed by the Basel Committee on Banking Supervision.