The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹1 crore on Union Bank of India (UBI) for non-compliance with certain provisions of its directions relating to fraud classification and reporting and sale of stressed assets.
The central bank, in a statement, said its inspection of UBI revealed, inter alia, non-compliance with the above-mentioned directions to the extent of (i) failure to classify an account as Red Flag Account despite presence of Early Warning Signals and (ii) failure to disclose ageing of and provisioning for Security Receipts (SRs) in its Annual Report.
RBI had conducted Statutory Inspection for Supervisory Evaluation (ISE) of UBI with reference to its financial position as on March 31, 2019 (ISE 2019). It examined the Risk Assessment Report, Inspection Report and all the related correspondences pertaining to ISE 2019.
Following the revelations in ISE, RBI issued a notice to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with the RBI directions, as stated therein.
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 its directions was substantiated and warranted imposition of monetary penalty on the bank, to the extent of non-compliance with the aforesaid directions, per the statement.
RBI said 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.