RBI imposes Rs 3 cr penalty on Union Bank for KYC non-compliance

Mumbai, July 31 (IANS) The Reserve Bank of India (RBI) on Monday said it has imposed a penalty of Rs 3 crore on the Union Bank of India for non-compliance of Know Your Customer (KYC) norms.

RBI imposed the penalty of Rs 2 crore and Rs 1 crore on July 26 under the provisions of the Banking Regulation Act, 1949, taking into account failure of the bank to adhere to certain directions issued by it, the apex bank said here in a notification.

"This 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," the statement noted.

RBI said it had received a complaint regarding huge cash withdrawals in certain accounts maintained with Union Bank. Also, based on some media reports related to a fraud in a bank, an examination of certain accounts in the bank, which had substantial transactions, was conducted.

Upon examination of the documents obtained in this regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed for non-compliance with directions issued by RBI.

"After considering the bank's reply, oral submissions made in the personal hearing, as also the additional information and documents furnished, RBI came to the conclusion that the aforesaid charge of non-compliance with RBI directions was substantiated and warranted imposition of monetary penalty," it noted.