Union Bank, Murshidabad DCCB, Lendbox Penalized; Rs1.05 Cr Fine

These actions are based on deficiencies in regulatory compliance

FinTech BizNews Service

Mumbai, May 26, 2025: The Reserve Bank of India (RBI) has, by separate orders in the current month, imposed a monetary penalty on 1 PSU bank, 1 DCCB and 1 technology company. The Reserve Bank of India (RBI) has imposed Rs63.60 lakh on Union Bank of India; Rs40 lakh on Transactree Technologies and Rs2.10 lakh on Murshidabad District Central Co-operative Bank.

1 The Reserve Bank of India (RBI) has, by an order dated May 23, 2025, imposed a monetary penalty of Rs63.60 lakh (Rupees Sixty Three Lakh Sixty Thousand only) on Union Bank of India (the bank) for non-compliance with the provisions of Section 26A of the Banking Regulation Act, 1949 (BR Act) and certain directions issued by RBI on ‘Credit Flow to Agriculture - Collateral free Agricultural Loans’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) and Section 51(1) of the BR Act.

The Statutory Inspections for Supervisory Evaluation (ISE 2023 and 2024) of the bank was conducted by RBI with reference to its financial position as on March 31, 2023 and March 31, 2024. Based on supervisory findings of non-compliance with 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 its failure to comply with the said 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 had not transferred eligible amounts to the Depositor Education and Awareness Fund within the prescribed period; and
2. The bank had obtained collateral security for agricultural loans amounting upto Rs1.60 lakh in certain cases.

This action is based on deficiencies in 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.

2 The Reserve Bank of India (RBI) has, by an order dated May 22, 2025, imposed a monetary penalty of Rs2.10 lakh (Rupees Two lakh ten thousand only) on Murshidabad District Central Co-operative Bank Ltd., West Bengal (the bank) for non-compliance with the directions issued by RBI on ‘Know Your Customer (KYC)’ and ‘Membership of Credit Information Companies (CICs) by Co-operative Banks’. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of Section 47A(1)(c) read with Sections 46(4)(i) and 56 of the Banking Regulation Act, 1949 and Section 25(1)(iii) read with Section 23(4) of the Credit Information Companies (Regulation) Act, 2005.

The statutory inspection of the bank was conducted by the National Bank for Agriculture and Rural Development (NABARD) with reference to its financial position as on March 31, 2024. Based on supervisory findings of non-compliance with 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 its failure to comply with the said directions. After considering the bank’s reply to the notice and oral submissions made during the personal hearing, RBI found, inter alia, that the following charges against the bank were sustained, warranting imposition of monetary penalty:

The bank had failed to:

1. carry out periodic review of risk categorisation of accounts, with such periodicity being at least once in six months;
2. conduct periodic updation of KYC of its customers; and
3. furnish credit information of its borrowers to three Credit Information Companies.

This action is based on deficiency in 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 this monetary penalty is without prejudice to any other action that may be initiated by RBI against the bank.

3 The Reserve Bank of India (RBI) has, by an order dated May 23, 2025, imposed a monetary penalty of Rs40 lakh (Rupees Forty Lakh only) on Transactree Technologies Private Limited [also referred to as ‘Lendbox’] (the company), for non-compliance with certain provisions of the ‘Non-Banking Financial Company - Peer to Peer Lending Platform (Reserve Bank) Directions, 2017’ issued by RBI. This penalty has been imposed in exercise of powers conferred on RBI under the provisions of clause (b) of sub-section (1) of Section 58G read with clause (aa) of sub-section (5) of Section 58B of the Reserve Bank of India Act, 1934.

A scrutiny of the company was conducted by RBI in September 2023. Based on supervisory findings of non-compliance with RBI directions and related correspondence in that regard, a notice was issued to the company advising it to show cause as to why penalty should not be imposed on it for its failure to comply with the said directions.

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

The company:

1. routed the amounts disbursed and collected in loan accounts in the P2P Platform through a ‘co-lending escrow account’ in violation of the laid down ‘Fund Transfer Mechanism’; and
2. did not: (a) disclose credit assessment and risk profile of the borrowers to the prospective lenders; and (b) disbursed loans to individual borrowers without the specific approval of individual lenders.

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