LI Network
Published on: October 14, 2023 at 14:31 IST
The Reserve Bank of India (RBI) has imposed financial penalties on Union Bank of India and RBL Bank for breaches of regulatory rules. Union Bank of India has been fined Rs 1 crore for not adhering to specific directives.
They sanctioned a term loan for a corporation without conducting the necessary due diligence on the feasibility and financial viability of the associated projects, ensuring that the revenue generated from these projects would cover debt servicing obligations.
RBL Bank has received a penalty of Rs 64 lakh for its failure to obtain an annual declaration in Form B from a significant shareholder within one month of the financial years ending on March 31, 2018, March 31, 2019, and March 31, 2020.
Furthermore, the bank did not provide certificates to the RBI confirming the ‘fit and proper’ status of this major shareholder by the end of September in these three financial years.
It’s important to note that these actions by the RBI are a result of regulatory compliance shortcomings and do not pass judgment on the validity of any transactions or agreements between the banks and their customers.