Case Brief
What Happened
RBI imposed a monetary penalty of Rs 1 crore on Union Bank of India by order dated October 03, 2023. The penalty was for non-compliance with RBI directions on ‘Loans and Advances – Statutory and Other Restrictions’, identified during the Statutory Inspection for Supervisory Evaluation (ISE 2021). RBI said the bank sanctioned a term loan to a corporation to replace budgetary resources for certain projects, failed to undertake due diligence on project viability and bankability, and allowed repayment/service of the loan from budgetary resources. After issuing a show-cause notice and considering the bank’s reply and oral submissions, RBI concluded the violation was substantiated and warranted the penalty.