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.

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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.

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Due to an emergency, the government of Rajasthan requests that the RBI open all banks in border areas on holidays

 

The Rajasthani government has requested that all banks operating in seven important districts close to the international border stay open on public holidays this week due to an emergency situation. The goal of the directive is to guarantee that residents of these delicate locations will always have access to banking services. 

The Additional Chief Secretary of the Finance Department, Akhil Arora, wrote to the Reserve Bank of India (RBI) requesting that, despite the fact that May 10 and May 11, 2025, are public holidays, all bank branches in Jaisalmer, Barmer, Bikaner, Shri Ganganagar, Phalodi, Hanumangarh, and Jodhpur continue to operate.

The decision was made due to an “emergent situation” at the International Border of India, which requires constant access to essential banking services, especially in border districts. These services include transactions, withdrawals, fund transfers, and access to financial aid or emergency funds.

The letter emphasizes that it is important for banks to function normally during these days so that people living in these regions do not face inconvenience. This is especially important for those dependent on regular banking services for their daily needs and for any emergency-related financial transactions.

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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.

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Reserve Bank of India (RBI) allows children aged above 10 years to manage their own bank accounts

The Reserve Bank of India (RBI) has taken a major step toward encouraging early financial independence by permitting children ten years of age and older to open and manage their own savings and term deposit accounts on their own. A significant change in the way the banking sector interacts with young consumers has occurred with the release of the updated rules on April 21, 2025, which allow banks to allow minors to handle their own accounts—within the parameters set by each bank's risk policy.

Key highlights of the new guidelines:

Minor accounts at any age: Banks may allow minors of any age to open and operate savings and term deposit accounts through a natural or legal guardian. The RBI has reaffirmed the provision to allow mothers to act as guardians for such accounts, as per its long-standing circular from 1976.

Independent operation from age 10:

Minors above the age of 10 may open and operate their accounts independently, subject to limits and terms defined by individual banks, based on their internal risk management policies. These terms must be clearly communicated to the account holder.

Transition upon majority: On attaining majority (18 years), banks must collect fresh signatures and operating instructions from the account holder. If the account was managed by a guardian, the balance must be confirmed. Banks are instructed to take proactive steps to ensure a smooth transition.

Access to modern banking tools: Subject to their risk policies, banks are allowed to offer additional facilities like internet banking, ATM/debit cards, and cheque books to minor account holders.

No overdrafts allowed: Whether operated independently or through a guardian, minor accounts must remain in credit and cannot be overdrawn.

KYC compliance mandatory: Banks must perform customer due diligence while opening minor accounts and continue compliance under the RBI’s Master Direction on KYC, 2016.

These guidelines will be applicable to all commercial banks, urban co-operative banks, state co-operative banks, and district central co-operative banks. Institutions are required to revise their policies accordingly by July 1, 2025, RBI said.

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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.

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RBI released Annual Report of Ombudsman Complaint

 

The Annual Report of the Ombudsman Scheme for the period of April 1, 2023, to March 31, 2024, was published by the Reserve Bank of India.

 The Reserve Bank Integrated Ombudsman Scheme (RB-IOS) activities for 2021 are covered in the Annual Report, along with significant advancements in consumer protection and education throughout the year and future directions.

Download the Complaint Report

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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.

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