RBI imposes 1 cr penalty on Union Bank of India

RBI imposes 1 cr penalty on Union Bank of India The Reserve Bank of India (RBI) on Monday has imposed a penalty of Rs 1 crore on Union Bank of India for violating certain regulatory compliance of RBI's "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" directions. This penalty was issued in accordance with RBI's authority under section 47A(1)(c) of the Banking Regulation Act, 1949, as well as sections 46(4)(i) and 51(1). (the Act). The penalty was imposed by an order dated November 25, 2021. This action is based on regulatory compliance issues and is not meant to be a judgement on the legitimacy of any transaction or agreement between the bank and its customers.

Background

RBI conducted a Statutory Inspection for Supervisory Evaluation (ISE) of the bank with reference to its financial position as of March 31, 2019 (ISE 2019), and an examination of the Risk Assessment Report, Inspection Report, and all related correspondences pertaining to ISE 2019 revealed, among other things, non-compliance with the above-mentioned directions to the extent of I failure to classify an account as a Red Flag Account despite the presence of Early Warning Sigs. A notice was sent to the bank in this regard, asking it to show cause why a penalty should not be imposed for non-compliance with the RBI orders as indicated therein. RBI concluded 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, after considering the bank's reply to the notice, oral submissions made during the personal hearing, and additional submissions made by the bank.