The action is based on deficiencies in statutory compliance
FinTech BizNews Service
Mumbai, March 27, 2026: The Reserve Bank of India (RBI) has imposed a monetary penalty on 3 PSU banks. RBI has imposed penalties on Union Bank of India, Bank of India and Central Bank of India.
1 The Reserve Bank of India (RBI) has, by an order dated March 23, 2026, imposed a monetary penalty of Rs95.40 lakh (Rupees Ninety Five Lakh Forty Thousand only) on Union Bank of India (the bank) for non-compliance with certain directions issued by RBI on ‘Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, and ‘Automation of Income Recognition, Asset Classification and Provisioning processes’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47 A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.
The Statutory Inspection for Supervisory Evaluation of the bank was conducted by RBI with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with the provisions of RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said RBI directions.
After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charges against the bank were sustained, warranting imposition of monetary penalty:
The bank did not credit (shadow reversal) the amount involved in the unauthorised electronic transaction to certain customers’ accounts within 10 working days from the date of such notification by the customer;
The bank did not provide customers with 24x7 access to report unauthorised banking transactions through multiple channels; and
The bank resorted to manual intervention in the System based asset classification process in certain KCC accounts.
The action is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
2 The Reserve Bank of India (RBI) has, by an order dated March 23, 2026, imposed a monetary penalty of Rs58.50 lakh (Rupees Fifty Eight Lakh Fifty Thousand only) on Bank of India (the bank) for non-compliance with certain provisions of the directions issued by RBI on ‘Priority Sector Lending (PSL) – Targets and Classification’ and ‘Interest Rate on Deposits’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.
The Statutory Inspection for Supervisory Evaluation (ISE 2025) of the bank was conducted by RBI with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.
After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charges against the bank were sustained, warranting imposition of monetary penalty:
i) the bank collected ad-hoc service charges / inspection charges / processing charges in certain priority sector loan accounts, having sanctioned amount up to ₹25,000/-; and
ii) the bank did not pay interest on certain Term Deposit Receipts (TDRs) from the date of maturity till the date of their repayment.
The action is based on 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. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
3 The Reserve Bank of India (RBI) has, by an order dated March 23, 2026, imposed a monetary penalty of Rs63.60 lakh (Rupees Sixty Three Lakh Sixty Thousand only) on Central Bank of India (the bank) for non-compliance with certain provisions of directions issued by RBI on ‘Know Your Customer (KYC)’ and ‘Financial lnclusion - Access to Banking Services - Basic Savings Bank Deposit Account (BSBDA)'. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.
The Statutory Inspection for Supervisory Evaluation (ISE 2025) of the bank was conducted by RBI with reference to its financial position as on March 31, 2025. Based on the supervisory findings of non-compliance with the provisions of RBI directions, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said provisions of RBI directions.
After considering the bank’s reply to the notice, additional submission made by it and oral submissions made during the personal hearing, RBI found that the following charges against the bank were sustained, warranting imposition of monetary penalty:
i) the bank failed to upload the KYC records of certain customers onto Central KYC Records Registry within the prescribed timeline.
ii) the bank opened additional BSBD accounts of certain customers, who were already holding BSBD accounts in the bank.
The action is based on deficiencies in statutory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.
