RBI Imposes Monetary Penalties on Union Bank, Bank of India, and Central Bank of India

The Reserve Bank of India has imposed monetary penalties on three public sector lenders, Union Bank of India, Bank of India, and Central Bank of India, for non-compliance with various regulatory directions. 

The penalties were imposed through an order dated March 23, 2026, under provisions of the Banking Regulation Act, 1949, following supervisory evaluations conducted by the central bank.

The actions are based on deficiencies in regulatory compliance identified during inspections of the banks’ financial positions as of March 31, 2025.

Penalty on Union Bank of India

RBI imposed a monetary penalty of ₹95.40 lakh on Union Bank of India for failing to comply with certain directions related to limiting customer liability in unauthorised electronic banking transactions and the automation of income recognition, asset classification, and provisioning processes.

According to the regulator, the bank did not credit the amount involved in certain unauthorised electronic transactions to customer accounts within 10 working days after notification. 

Additionally, the bank failed to provide customers with round-the-clock access to report unauthorised transactions through multiple channels. The inspection also found instances of manual intervention in system-based asset classification for certain Kisan Credit Card (KCC) accounts.

Penalty on Bank of India

Bank of India was fined ₹58.50 lakh for non-compliance with guidelines on priority sector lending and interest rates on deposits. RBI observed that the bank had collected ad-hoc service charges, inspection charges, or processing charges in certain priority sector loan accounts with sanctioned amounts up to ₹25,000.

The regulator also noted that the bank failed to pay interest on some term deposit receipts from the date of maturity until the date of repayment.

Penalty on Central Bank of India

Central Bank of India received a penalty of ₹63.60 lakh for violations related to Know Your Customer (KYC) guidelines and financial inclusion norms. RBI found that the bank had failed to upload certain customer KYC records to the Central KYC Records Registry within the prescribed time frame.

Additionally, the bank had opened multiple Basic Savings Bank Deposit Accounts for some customers who already held such accounts with the bank.

Also Read: RBI Imposes Penalty on Loknete R.D. Appa Kshirsagar Sahakari Bank!

Conclusion

RBI clarified that the penalties are based solely on deficiencies in regulatory and statutory compliance. The actions do not question the validity of any transactions or agreements between the banks and their customers. The regulator also noted that the penalties do not prevent it from initiating further supervisory action if required.

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