The Reserve Bank of India has closed down six urban cooperative banks (UCBs) which were suspected of being used to route illegal money. RBI has also asked state governments to take stern action against any other erring UCBs after reports emerged that such entities were being used as conduits for money laundering. UCBs are inspected annually or once in two years depending on their ratings or classification. About 70% of these banks are subjected to inspection every year. RBI has aggressively pursued the issue and around six UCBs were closed as they were found to be’unviable’. These banks were found to be lax on regulatory issues and were used as conduits. On the issue of risk categorisation and compilation or updating of profiles of all their existing customers, the apex bank said their regional officers have been advised to seek compliance from UCBs and submit an update which would be reviewed and any necessary action initiated.
