On August 6, 2024, the Reserve Bank of India (RBI) imposed a monetary penalty of ₹1,06,40,000 on Union Bank of India for non-compliance with its regulatory directives. The penalty arises from the bank's failure to adhere to guidelines concerning the 'Creation of a Central Repository of Large Common Exposures-Across Banks' and 'Know Your Customer (KYC)' requirements. This action was taken under the authority granted by sections 47A (1)(c), 46 (4)(i), and 51(1) of the Banking Regulation Act, 1949.
The decision followed the RBI's Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank's financial status as of March 31, 2022. The inspection revealed significant lapses in compliance, particularly concerning the accuracy and integrity of data reported under the Central Repository of Large Common Exposures (CRILC) and the risk categorization of certain customers. Despite the bank's explanations and oral submissions during a personal hearing, these deficiencies were deemed substantial enough to warrant a financial penalty.
It is important to note that this penalty is focused on addressing compliance shortfalls and does not affect the validity of any transactions or agreements made by the bank with its customers. Additionally, this monetary penalty is not a preclusive measure; RBI retains the right to pursue further actions against the bank as deemed necessary.
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