The Reserve Bank of India (RBI) imposed a fine of Rs1 crore on the Union Bank of India, as the latter failed to detect and report on cases of fraud on time. The penalty has been imposed by the RBI, as it hs the power under the Banking Regulation Act. RBI has issued a show cause notice to the bank on 15 January 2018, asking why a penalty cannot be imposed on Union Bank of India under the Act, as reported by firstpost.com.
Following which, the bank had responded to the regulator on February 1 this year, followed by an oral submission during a personal hearing on April 14. The bank said these documents were not appreciated by the RBI which lead to the imposition of a fine of Rs 1 crore.
The bank said later said that it has taken precautionary measures and has also implemented a concrete corrective action plan to effectively deal with the internal controls and to make sure that such incidents do not occur again. The RBI has many powers in order to regulate and supervise public sector banks, as reported by the livemint.com.
Earlier, during a discussion in the Rajya Sabha, the government had said, “powers of RBI are wide-ranging and comprehensive to deal with various situations that may emerge in all banks, including public sector banks.”
It further said that the RBI has the power to scrutinise the bank and its books of accounts. It can also appoint additional directors on the bank’s board.