RBI Imposes ₹2.17 Crore Penalty On Three Public Sector Banks For Regulatory Lapses

The Reserve Bank of India recently imposed monetary penalties aggregating to Rs 2.17 crore on three public sector banks, Bank of India, Central Bank of India, and Union Bank of India, after finding non-compliance with various regulatory directions.

According to press releases issued on Friday, the penalties were imposed following Statutory Inspection for Supervisory Evaluation conducted with reference to the financial position of the banks as of March 31, 2025, which revealed deficiencies in compliance with RBI directions.

Show cause notices were issued to the banks advising them to explain why a penalty should not be imposed, and after considering their replies, additional submissions, and oral submissions, RBI found that the charges were sustained.

A penalty of Rs 58.50 lakh was imposed on Bank of India for non-compliance with directions on Priority Sector Lending and Interest Rate on Deposits. The bank, inter alia, collected ad-hoc service/inspection/processing charges in certain priority sector loan accounts up to Rs 25,000 and did not pay interest on certain Term Deposit Receipts from the date of maturity till repayment.

The Central Bank of India was saddled with a penalty of Rs 63.60 lakh for non-compliance with directions on Know Your Customer (KYC) and Basic Savings Bank Deposit Accounts, including failure to upload KYC records onto the Central KYC Records Registry within the prescribed timeline and opening additional BSBD accounts for customers already holding such accounts.

Union Bank of India was imposed a penalty of ₹95.40 lakh for non-compliance with directions relating to limiting liability of customers in unauthorised electronic banking transactions and automation of income recognition and asset classification processes.

The bank, according to RBI, failed to credit amounts involved in unauthorised electronic transactions within the prescribed timeline, did not provide 24x7 access to report unauthorised banking transactions through multiple channels, and resorted to manual intervention in system-based asset classification in certain accounts.

“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. “ it clarified

The central bank further stated that the imposition of a monetary penalty is without prejudice to any further action that may be initiated.

Click here to read/download the Bank of India order

Click here to read/download the Central Bank of India order

Click here to read/download the Union Bank of India order