The Reserve Bank of India has fined Union Bank of India Rs 1 crore
Union Bank of India, or UBI, is a government-owned bank. It has approximately 120 million customers and financial assets worth US$106 billion.
With roughly 9500 branches, the combined business became the sixth-largest PSU bank in terms of branch system after the merger with Corporation Bank and Andhra Bank, which took effect on April 1, 2020. Hong Kong, Dubai, Antwerp, and Sydney are the locations of four of them. In addition to Shanghai, Beijing, and Abu Dhabi, Shanghai, Beijing, and Abu Dhabi.
Union Bank of India, UBI’s wholly-owned subsidiary, operates in the United Kingdom (UK). There are around 9300 domestic branches in the bank’s system. With over 120 million clients and 77000 staff, over 11800 ATMs and 8216 Business Correspondent Points are available. With over 120 million customers and 77000 staff, over 11800 ATMs and 8216 Business Correspondent Points are available.
The Reserve Bank of India fined Union Bank for failing to comply with some rules related to ‘Sale of Stressed Assets by Banks’ and ‘Fraud – Commercial banks and select financial institutions’ failure to categorize a user as a Red Flag User. In a statement, the central bank added, “This measure is based on compliance requirements inadequacies and is not meant to call into doubt the legitimacy of any transaction or arrangement the bank has with its clients.”
“Union Bank of India had to experience backlash and was also subjected to a many legal examination by RBI, as well as the inspection of the Risk Assessment Report and Inspection Report, and all related correspondences about ISE 2019 revealed, among other things, non-compliance to the depth of failure to classify an account as a Red Flag (big warning) Account despite the several warnings,” the statement continued.
According to the statement, the bank was handed a notice to explain why a charge should not be levied for non-compliance with the RBI standards.
“In this severe situation the bank’s answer to this issue as well as the statements during the personal hearing, RBI determined that the accusation of defiance with the previously specified regulations was unfounded, RBI came to the realization that the charge of defiance with the afore mentioned RBI instructions was substantiated and warranted imposition of punishment on the bank, to the extent of non-compliance with the instructions,” the central bank added. This action was imposed after the Reserve Bank of India Directions 2016 and Guidelines on Sale of Stressed Assets by Banks were not followed. This all occurred on November 25.
In the risk assessment report, inspection report, and all related correspondences, the RBI found non-compliance with specific directions, including failure to classify an account as a Red Flag despite an inability to show the ageing and provisioning for security receipts (SRs) in its annual report.
However, the central bank said that the penalty is based on regulatory compliance issues and is not meant to rule on the validity of any payment or agreement between the bank and its customers.
According to the RBI, the bank was sent to show why a penalty should not be imposed for failing to follow RBI instructions.
“RBI determined that the charge of this defiance with the previously stated RBI instructions was not justified. It was substantiated and warranted imposition of punitive action on the bank, to the extent of non-compliance with the clearly explained directions,” RBI said.
RBI concluded that the allegation of non-compliance was proven and warranted imposition of punishment on the bank after reviewing the bank’s response to the notice, oral representations made during the personal hearing, and other submissions RBI said in a statement.
On Monday, Union Bank of India’s stock slid 1.60 per cent to settle at 43 on the National Stock Exchange of Monday.
Union Bank of India’s standalone net profit increased 195.4 per cent to Rs 1,526.12 crore in Q2 FY22 compared to Q2 FY21, thanks to a 2.3 per cent increase in total income to Rs 20,683.95 crore.
Union Bank of India’s stock climbed 0.81 per cent to Rs 43.65 on the Bombay Stock Exchange. As of September 30, 2021, the government of India owned 83.50 per cent of the state-owned bank, while the Life Insurance Corporation of India (LIC) owned 5.06 per cent.