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RBI Action: Banking regulator Reserve Bank of India (RBI) has taken major action against public sector bank UCO Bank in case of violation of rules. RBI has imposed a fine of Rs 2,68,30,000 on UCO Bank for not following the Banking Regulation Act 1949 and its instructions. Reserve Bank of India has given this information by issuing a press release.
According to RBI, this action has been taken against UCO Bank for violating the provisions of Section 26A of the Banking Regulation Act 1949, interest rates on advances, discipline in bank's current accounts, interest rates on deposits and non-compliance with the guidelines issued by RBI regarding fraud classification and reporting of commercial banks and selected financial institutions. RBI said that it has taken this action under the powers given to it.
Monetary penalty imposed on UCO Bank
RBI said that after the surveillance investigation of the bank, a show cause notice was also issued to it. The bank was sent a notice asking why the maximum penalty should not be imposed on it. After the bank's reply to the notice, RBI found that action should be taken to impose a penalty, after which a monetary penalty was imposed on the bank.
UCO Bank violated these rules
According to RBI, UCO Bank failed to benchmark floating rate personal retail loans and loans to MSMEs with external benchmarks. Current accounts were opened in the names of people whose exposure to the banking system was more than Rs 5 crore. Savings deposit accounts were opened in the names of people who were not eligible. It failed to transfer certain unclaimed term deposit balances to the Depositor Education and Awareness Fund within three months of the maturity period, after which they remained unclaimed for more than 10 years. Also, the bank did not show interest in reporting fraud cases to enforcement agencies.
RBI said, this action has been taken due to deficiencies in statutory and regulatory compliance and is not intended to affect any transaction or agreement entered into by the bank with its customers. RBI said that the imposition of monetary penalty will not have any adverse effect on any other action initiated against the bank.