RBI imposed penalty of Rs.63.60 lakh on PSU Bank

Union Bank of India was hit with a ₹63.60 lakh fine by the Reserve Bank of India (RBI) for not meeting certain regulatory standards. The May 23, 2025, penalty order lists non-compliance with RBI's rules on collateral-free agricultural loans as well as violations of Section 26A of the Banking Regulation Act, 1949. 

The decision comes after the RBI examined Union Bank's financial situation as of March 31 in 2023 and 2024 as part of its regular inspections under the Statutory Inspections for Supervisory Evaluation (ISE) program. 

Two significant infractions were found during the inspections: 

Delay in Transfer of Depositor Education and Awareness Fund: 

The bank did not make the required timely transfer of eligible unclaimed funds to the Depositor Education and Awareness (DEA) Fund.

Based on these findings, the RBI issued a show-cause notice to the bank, asking it to explain why a penalty should not be imposed. After reviewing the bank’s written response and oral submissions during a hearing, the RBI concluded that the violations were valid and warranted financial penalties.

The RBI emphasized that the penalty is strictly related to regulatory compliance shortcomings and does not question the legality or validity of the bank’s agreements with its customers. It also noted that this action is without prejudice to any further actions that may be taken in the future.

This enforcement reflects RBI’s ongoing commitment to ensuring banks adhere strictly to rules, particularly those aimed at protecting depositors and supporting priority sectors like agriculture.

Read More

RBI imposed Rs 1.72 crore Penalty on PSU Bank

 

The Reserve Bank of India (RBI) has fined the State Bank of India (SBI) Rs.1.72 crore (Rs.1,72,80,000) on April 29, 2025. The fine was for not following certain rules related to:

Giving loans and advances

• Protecting customers from unauthorized electronic transactions
• Proper procedures for opening current accounts

This penalty was imposed under RBI’s powers as per the Banking Regulation Act, 1949. RBI had carried out an inspection of SBI based on its financial position as of March 31, 2023. During this review, RBI found that SBI had not followed some of its rules. A notice was sent to SBI asking why it should not be penalized.

After reviewing SBI’s written and verbal responses, RBI decided that the following issues were valid:

1. SBI gave a bridge loan to an organization based on money it expected to receive from the government (as subsidies or reimbursements).
2. SBI delayed refunds for customers affected by unauthorized online transactions. In some cases, it did not credit accounts within 10 working days or compensate customers within 90 days.
3. SBI opened or kept some current accounts in ways that did not follow the RBI’s rules.

RBI clarified that this action is about breaking regulatory rules. It does not mean the bank’s deals with customers are invalid. Also, this penalty does not stop RBI from taking other actions against the bank in the future.

What is a Bridge Loan?

A bridge loan is a short-term loan used to “bridge the gap” between two financial events—typically between the need for immediate funds and the arrival of expected funds. A bridge loan helps someone get quick money now while waiting for larger funds to come in later. Example: A company is expecting a Rs.5 crore subsidy from the government, but needs Rs.1 crore now to keep operations going. It can take a bridge loan from a bank, and repay it once the subsidy arrives.

Read More

RBI imposed Penalty on 4 Major Banks

 

Four major banks, Bank of Baroda, IDBI Bank, Bank of Maharashtra, and ICICI Bank, have recently been hit with financial fines by the Reserve Bank of India (RBI) for noncompliance with key regulatory requirements. Following RBI examinations of the banks' operational and financial operations for the fiscal years 2023 and 2024, these fines were imposed. These fines are intended to improve adherence to banking regulations and guarantee that banks conduct themselves in an open and accountable manner. The RBI underlined, however, that these measures are only connected to regulatory matters and have no bearing on the legality of agreements or transactions between banks and their clients.

Bank of Baroda(BoB)

For failing to observe RBI guidelines regarding customer service and deposit interest rates, Bank of Baroda was fined Rs.61.40 lakh. In violation of the regulations, the bank permitted an insurance company to provide non-cash incentives to its employees. Additionally, some frozen or dormant savings accounts did not get timely interest credits. 

IDBI Bank 

In 2023, these problems were discovered during an RBI examination. Following a personal hearing and an assessment of the bank's response, the RBI chose to issue the penalty after the bank was requested to explain its actions.

For violating the RBI's guidelines under the Interest Subvention Scheme, which offers farmers interest relief on short-term loans made through the Kisan Credit Card (KCC), IDBI Bank was fined Rs.31.80 lakh.

Bank of Maharashtra 

BoM received a fine of Rs.31.80 lakh for failing to fully comply with Know Your Customer (KYC) rules. The bank opened several deposit accounts using Aadhaar-based e-KYC through OTP, in a non-face-to-face manner, but did not meet all the regulatory requirements for such processes. This was identified during the RBI’s evaluation for the financial year ending March 31, 2024. The bank’s explanations and submissions were reviewed, and the penalty was imposed for deficiencies in following the KYC norms.

ICICI Bank 

ICICI Bank faced the highest penalty of Rs.97.80 lakh. The bank failed to report a cyber security incident to the RBI within the required time, did not implement an effective system for alerting suspicious account activity, and also failed to send credit card statements to certain customers—yet charged them late payment fees. These failures were considered serious breaches of customer service and operational transparency. After a detailed inspection and review of the bank’s responses, the RBI imposed the penalty.These penalties are aimed at reinforcing the importance of following regulatory standards. RBI emphasized that these fines are not judgments on the legal validity of customer transactions or contracts, but are strictly based on gaps in compliance. Penalties have 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.

Read More

RBI imposes Penalty on this PSU Bank for irregularity in Savings Accounts

 

For not adhering to certain RBI regulations, Punjab & Sind Bank has been fined ₹68.20 lakh by the Reserve Bank of India (RBI). The penalty was imposed in accordance with Sections 47A(1)(c), 46(4)(i), and 51(1) of the Banking Regulation Act of 1949.

Based on the bank's financial status as of March 31, 2023, RBI carried out a Statutory Inspection for Supervisory Evaluation (ISE 2023) in 2023. 

 

The following areas showed non-compliance with RBI's instructions during the inspection: 

 Failure to disclose significant Exposures: In order to track significant common exposures across banks, the bank failed to disclose borrowers with non-fund-based exposure of ₹5 crore and above to the Central Repository of Information on Large Credits (CRILC). 

 Inconsistencies in Savings Bank Accounts: In violation of RBI regulations on financial inclusion, the bank permitted some holders of Basic Savings Bank Deposit Accounts (BSBDAs) to open additional BSBDAs.

After detecting these violations, RBI issued a show-cause notice to Punjab & Sind Bank, asking for an explanation. The bank submitted its reply, additional clarifications, and oral representations during a personal hearing. However, after reviewing the bank’s responses, RBI determined that the charges were valid, leading to the imposition of the penalty.

Read More

RBI imposes monetary penalty for non-compliance on Bank of India(BOI), Canara Bank and J&K Bank

Canara Bank, Bank of India, and Jammu & Kashmir Bank have all been hit with financial fines by the RBI for breaking regulatory guidelines. 

Canara Bank was fined ₹1.63 crore by the Reserve Bank of India (RBI) for failing to follow its rules regarding priority sector lending, deposit interest rates, and financial inclusion.

 For not transferring qualified funds to the Depositor Education and Awareness Fund within the allotted time, Bank of India was fined ₹1 crore. 

For violating guidelines pertaining to loans and advances, financial inclusion, and Know Your Customer (KYC) standards, Jammu & Kashmir Bank was fined ₹3.31 crore.

Read More

RBI imposes Monetary Penalty on this PSU Bank

The Reserve Bank of India (RBI) has imposed a monetary penalty of Rs 1.45 crore on Central Bank of India. This penalty has been imposed because the bank failed to comply with certain directions issued by the RBI. The central bank made this announcement on June 14.

According to an RBI press release, the Central Bank of India sanctioned a working capital demand loan to a Corporation against amounts receivable from the Government in the form of subsidies. This action was in violation of the RBI’s directions.

Additionally, the bank failed to credit the amount involved in unauthorized electronic transactions to the customer’s account within 10 working days from the date of notification by the customer. This also goes against the RBI’s guidelines.

Furthermore, the bank failed to resolve complaints and provide compensation to certain customers within 90 days from the date of receipt of such complaints. The RBI stated these reasons for imposing the penalty on the bank.

The RBI conducted a Statutory Inspection for Supervisory Evaluation of the bank with reference to its financial position as of March 31, 2022. Based on the findings of non-compliance with RBI directions and related correspondence, a notice was issued to the bank. The bank was given an opportunity to show cause as to why a penalty should not be imposed on it for its failure to comply with the directions.

After reviewing the bank’s reply to the notice, the RBI found that the charges against the bank were sustained, warranting the imposition of a monetary penalty.

It is important to note that the action taken by the RBI is based on deficiencies in regulatory compliance. The penalty is not intended to determine the validity of any transactions or agreements entered into by the bank with its customers.

The RBI emphasized that the imposition of the monetary penalty does not prejudice any other actions that may be initiated by the RBI against the bank.

Read More

Central Information Commission impose penalty on BOI officers

 

Read More

RBI imposes Rs. 2.5 crore penalty on three banks

The Reserve Bank of India (RBI) imposed a monetary penalty on three private and public sector lenders on Friday. The central bank charged Jammu & Kashmir Bank with Rs.2.5 crore penalty, while the Bank of Maharashtra faced a fine of Rs.1.45 crore. Axis Bank received the least amount of penalty among them to the tune of Rs.30 lakh.

Jammu & Kashmir Bank:

RBI imposed a Rs.2.5 crore penalty on J&K Bank for non-compliance with certain directions issued by RBI on ‘Creation of a Central Repository of Large Common Exposures-Across Banks’, read with ‘Central Repository of Information on Large Credits (CRILC) – Revision in Reporting’, ‘Loans and Advances – Statutory and other Restrictions’ and ‘Time-bound implementation and strengthening of SWIFT-related operational controls’.

According to RBI's inspection, J&K Bank non-complied in --- (i) failed to ensure integrity and quality of data submitted to CRILC, (ii) extended term loans to a corporation (a) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects are sufficient to take care of the debt servicing obligations and (b) failing to ensure that the repayment/servicing of said term loans were not made out of budgetary resources and (iii) created financial/non-financial messages in SWIFT without first ensuring that the underlying transactions have been duly reflected in the CBS.

Bank of Maharashtra:

This government-owned bank was imposed with Rs.1.45 crore penalty for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’ and Advisory on ‘Man in the Middle (MiTM) Attacks in ATMs’ (the Advisory).

BoM committed non-compliance in the extent of --- (1) it sanctioned a term loan to a Corporation (i) in lieu of or to substitute budgetary resources envisaged for certain projects; (ii) without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations; and (iii) the repayment/servicing of which was made out of budgetary resources, and (2) it failed to implement required control measures for ATMs relating to end-to-end encryption of communication between the ATM terminal/PC and the ATM Switch, within the prescribed timeline.

Axis Bank:

Axis Bank, one of the leading private sector lenders, was penalised with Rs.30 lakh due to its non-compliance with certain provisions of the RBI directions on ‘Prudential Norms on Income Recognition, Asset Classification and Provisioning pertaining to Advances – Credit Card Accounts’.

As per RBI's inspection, Axis Bank had levied penal charges in certain accounts for late payment of credit card dues though the customers had paid the dues by the due date, through third party platforms.

Notably, before imposing the charges, RBI had sent notices to these three banks --- advising them to show cause as to why a penalty should not be imposed on them for failure to comply with the directions issued.

After considering the banks' reply to the notice, RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI directions was substantiated and warranted the imposition of monetary penalty on these banks.

Read More