Reserve Bank of India imposes monetary penalty on UCO Bank
Case Brief
The Reserve Bank of India imposed a monetary penalty of ₹20 million on UCO Bank by order dated January 29, 2019. The penalty was for non-compliance with RBI's circular on collection of account payee cheques and its Master Directions on fraud classification and reporting for commercial banks and select FIs. RBI said the action was taken under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949, based on deficiencies in regulatory compliance.
RBI imposed a monetary penalty on UCO Bank under Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949 for non-compliance with the Circular on 'Collection of Account Payee Cheques – Prohibition on Crediting Proceeds to Third Party Account' dated January 22, 2014 and the Master Directions on 'Frauds – Classification and Reporting by commercial banks and select FIs' dated July 01, 2016. The release states the action was taken due to deficiencies in regulatory compliance and the bank's failure to adhere to the aforesaid RBI directions.
Severity Assessment
A ₹20 million penalty falls in the ₹10 lakh to ₹20 lakh band, giving severity 3, with no additional structural restriction.
UCO Bank must absorb the penalty and address the compliance deficiencies identified by RBI. The action does not invalidate customer transactions, but it signals heightened regulatory scrutiny over cheque collection practices and fraud reporting/classification going forward.
Published as UCO Bank
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