RBI imposes Rs 1 crore fine on Union Bank of India for non-compliance of frauds classification
RBI has imposed a monetary penalty of Rs one crore on Union Bank of India for violating certain provisions related to sale of stressed assets and reporting of frauds.
The RBI inspection revealed non-compliance with rules on classification of an account as red flag account despite presence of early warning signals and also failure to disclose provisioning for Security Receipts (SRs) in its Annual Report, the central bank 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, the RBI said.
According to the Central Bank, Union Bank of India failed to classify an account as red flag account despite presence of early warning signals and also did not disclose ageing of and provisioning for security receipts in its annual report.
A notice was issued 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.
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 was substantiated and warranted imposition of monetary penalty on the bank, RBI said in a statement.
