What changed

The Reserve Bank of India (RBI) has levied a penalty of ₹95.40 lakh on Union Bank of India due to violations of specific RBI directions. These violations include failing to credit unauthorized electronic transaction amounts to customer accounts within the stipulated 10 working days, not providing 24x7 access for reporting such transactions through multiple channels, and resorting to manual intervention in the automated asset classification process for certain KCC accounts. The inspection that identified these issues was based on the bank's financial position as of March 31, 2025.

This action highlights the critical need for banks to ensure strict adherence to regulatory guidelines concerning customer protection in electronic banking and the integrity of automated financial processes. Union Bank of India must review its internal controls and operational procedures to prevent recurrence and ensure compliance with RBI directives. While this penalty is not intended to invalidate customer transactions, it underscores the potential for further regulatory action if deficiencies persist.

What to do next

Review and update procedures for crediting unauthorized electronic transaction amounts within 10 working days.
Ensure 24x7 customer access for reporting unauthorized banking transactions across multiple channels.
Verify and reinforce the integrity of automated asset classification processes, eliminating manual intervention where not permitted.

Penalties

₹95.40 lakh

Source document (simplified)

Press Releases

| () | |
| Date : Mar 27, 2026 | |
| RBI imposes monetary penalty on Union Bank of India | |
| | The Reserve Bank of India (RBI) has, by an order dated March 23, 2026, imposed a monetary penalty of ₹95.40 lakh (Rupees Ninety Five Lakh Forty Thousand only) on Union Bank of India (the bank) for non-compliance with certain directions issued by RBI on ‘Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, and ‘Automation of Income Recognition, Asset Classification and Provisioning processes’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47 A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

The Statutory Inspection for Supervisory Evaluation of the bank was conducted by RBI with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with the provisions of RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said RBI directions.

After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charges against the bank were sustained, warranting imposition of monetary penalty:

1. The bank did not credit (shadow reversal) the amount involved in the unauthorised electronic transaction to certain customers’ accounts within 10 working days from the date of such notification by the customer;
2. The bank did not provide customers with 24x7 access to report unauthorised banking transactions through multiple channels; and
3. The bank resorted to manual intervention in the System based asset classification process in certain KCC accounts.

The action is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

(Brij Raj)
Chief General Manager

Press Release: 2025-2026/2338 | | The Reserve Bank of India (RBI) has, by an order dated March 23, 2026, imposed a monetary penalty of ₹95.40 lakh (Rupees Ninety Five Lakh Forty Thousand only) on Union Bank of India (the bank) for non-compliance with certain directions issued by RBI on ‘Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, and ‘Automation of Income Recognition, Asset Classification and Provisioning processes’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47 A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

The Statutory Inspection for Supervisory Evaluation of the bank was conducted by RBI with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with the provisions of RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said RBI directions.

After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charges against the bank were sustained, warranting imposition of monetary penalty:

The bank did not credit (shadow reversal) the amount involved in the unauthorised electronic transaction to certain customers’ accounts within 10 working days from the date of such notification by the customer;
The bank did not provide customers with 24x7 access to report unauthorised banking transactions through multiple channels; and
The bank resorted to manual intervention in the System based asset classification process in certain KCC accounts. The action is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

(Brij Raj)
Chief General Manager

Press Release: 2025-2026/2338 |
| The Reserve Bank of India (RBI) has, by an order dated March 23, 2026, imposed a monetary penalty of ₹95.40 lakh (Rupees Ninety Five Lakh Forty Thousand only) on Union Bank of India (the bank) for non-compliance with certain directions issued by RBI on ‘Limiting Liability of Customers in Unauthorised Electronic Banking Transactions’, and ‘Automation of Income Recognition, Asset Classification and Provisioning processes’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of section 47 A(1)(c) read with sections 46(4)(i) and 51(1) of the Banking Regulation Act, 1949.

The Statutory Inspection for Supervisory Evaluation of the bank was conducted by RBI with reference to its financial position as on March 31, 2025. Based on supervisory findings of non-compliance with the provisions of RBI directions and related correspondence in that regard, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the said RBI directions.

After considering the bank’s reply to the notice, additional submissions made by it and oral submissions made during the personal hearing, RBI found that the following charges against the bank were sustained, warranting imposition of monetary penalty:

The bank did not credit (shadow reversal) the amount involved in the unauthorised electronic transaction to certain customers’ accounts within 10 working days from the date of such notification by the customer;
The bank did not provide customers with 24x7 access to report unauthorised banking transactions through multiple channels; and
The bank resorted to manual intervention in the System based asset classification process in certain KCC accounts. The action is based on deficiencies in statutory and regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers. Further, imposition of monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

(Brij Raj)
Chief General Manager

Press Release: 2025-2026/2338 | |

Named provisions

Limiting Liability of Customers in Unauthorised Electronic Banking Transactions Automation of Income Recognition, Asset Classification and Provisioning processes