Reserve Bank of India (RBI) has imposed penalties totalling ₹2.20 crore on Union Bank of India (UBI), Central Bank of India (CBI), Bank of India (BOI) and Pine Labs Ltd a fin-tech and payment technology company for non-compliance with the directions issued by the banking regulator. The highest penalty of ₹95.40 has been imposed on Union Bank of India
UBI has been penalised for failing to comply with certain directions issued RBI. These relate to the limitation of customer liability in unauthorised electronic banking transactions, as well as the automation of income recognition, asset classification and provisioning processes.
RBI’s statutory inspection found several lapses on the part of Union Bank of India (UBI). The lender failed to credit (through shadow reversal) the amount involved in unauthorised electronic transactions to certain customers’ accounts within 10 working days of notification. It also did not provide customers with round-the-clock (24x7) access to report unauthorised banking transactions through multiple channels. Additionally, the lender resorted to manual intervention in the system-based asset classification process in certain KCC accounts.
CBI was fined ₹63.60 lakh for non-compliance with certain provisions of directions issued by RBI on know-your-customer (KYC) norms and financial inclusion, specifically relating to access to banking services and basic savings bank deposit accounts (BSBDA).The lender failed to upload the KYC records of certain customers to the central KYC records registry within the prescribed timeline. It also opened additional BSBDA accounts for some customers who already held such accounts with the bank, in violation of the guidelines.
Further, BOI was penalised ₹58.50 lakh for non-compliance with certain provisions of RBI directions on priority sector lending (PSL) – targets and classification and interest rates on deposits.
BOI was found to have collected ad hoc service, inspection or processing charges in certain priority sector loan accounts with sanctioned amounts up to ₹25,000. Additionally, it failed to pay interest on certain term deposit receipts (TDRs) from the date of maturity until the date of repayment.
Similarly, during its inspection of Pine Labs, RBI found that the company had issued several full-KYC prepaid payment instruments (PPIs) without completing the required KYC of the PPI-holders.
As a result, RBI imposed a penalty of ₹3.10 lakh on Pine Labs.
In all four cases, RBI clarified that the penalties are based on deficiencies in regulatory compliance and are not intended to pronounce on the validity of any transactions or agreements these entities entered into with their customers.
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