RBI imposes Rs 1 crore penalty on Union Bank of India for non-compliance of rules

The Reserve Bank of India (RBI) has imposed Rs 1 crore penalty on Union Bank of India for non-compliance with certain provisions of directions issued by the central bank.

According to the RBI, the penalty has been imposed in exercise of powers vested in RBI under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

“The Reserve Bank of India (RBI) has, by an order dated November 25, 2021, imposed a monetary penalty of ₹1 Crore (Rupees One Crore only) on Union Bank of India,” said a statement issued by RBI on Monday.

The penalty has been imposed for non-compliance with the certain provisions of directions issued by RBI contained in “Reserve Bank of India (Fraud - Classification and Reporting by commercial banks and select FIs) Directions 2016” and “Guidelines on Sale of Stressed Assets by Banks”.

This action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, the statement added.

The statement further said that the RBI has issued a notice to Union Bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the above mentioned RBI directions.

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The show cause notice was issued by the central bank after Statutory Inspection for Supervisory Evaluation (ISE) of the bank with reference to its financial position as on March 31, 2019 (ISE 2019) and the examination of the Risk Assessment Report, Inspection Report and all the related correspondences pertaining to ISE 2019.

“After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by the bank, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions,” the statement added.