The inspection revealed non-compliance with directions on IRAC norms, sharing of information about
customers with other banks, reporting of data, fraud risk management, and classification and reporting of frauds.
Following the inspection, the RBI issued a show-cause notice.
After considering the bank’s reply and oral submissions, the RBI came to the conclusion that charges of non-compliance were substantiated and warranted imposition of monetary penalty.
The RBI said the penalty has been imposed in exercise of powers vested under various sections of the Banking Regulation Act, 1949. This action is based on deficiencies in regulatory compliance. It is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers, the RBI said.
Rs 10-lakh fine on Union Bank
The Reserve Bank of India(RBI) has imposed a penalty of Rs 10 lakh on Union Bank of India for non-compliancewith the directions on cyber security framework.
The RBI examined the cyber security framework of the bank, following reports of seven fraudulent messages (of $171 million) generated through the SWIFT system of the bank in 2016.
The examination revealed several deficiencies.