RBI imposes fine of Rs 1 crore on Union Bank of India

New Delhi: The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1 crore on Union Bank of India (UBI) for non-compliance of certain provisions of its directions relating to fraud classification and reporting and sale of stressed assets. ,

According to a statement issued by RBI on November 25, it has imposed a monetary penalty of Rs 1 crore on Union Bank of India (Bank) for non-compliance of certain provisions of the directions issued by RBI contained in “Reserve Bank”. Government of India (Frauds – Classification and Reporting by Commercial Banks and Select Financial Institutions) Directions 2016″ and “Guidelines on Sale of Stressed Assets by Banks”.

This penalty has been imposed in exercise of the 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 (Act) . ,

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

The central bank said in the statement that its inspection of the UBI has revealed that, inter alia, the above directions have not been complied with to the extent of (i) classifying an account as a red flag account. Failure to disclose, despite initial appearance of warning signs and (ii) aging and provision of Security Receipts (SRs) in its annual report.

The RBI had conducted the statutory oversight for Supervisory Appraisal (ISE) of UBI with reference to its financial position on March 31, 2019 (ISE 2019). It scrutinized the Risk Assessment Report, Inspection Report and all related correspondence relating to ISE 2019.

Following the disclosure at the ISE, RBI issued a notice to the bank advising it to show reasons why it should not be penalized for non-compliance with RBI’s directions, as stated therein.

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