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Reserve Bank of India (RBI) imposes Rs 2 crore penalty on UCO Bank

Published on February 07, 2019
The Reserve Bank of India (RBI) has imposed Rs 2 crore penalty on UCO Bank for non-compliance of instructions issued by RBI on the collection of account payee instruments and those on frauds-classification and reporting.
Reserve Bank of India (RBI) imposes Rs 2 crore penalty on UCO Bank

About RBI's directions on Fraud Classification and Reporting:

  • The Reserve Bank of India (RBI) advises banks from time to time about the major fraud-prone areas and the safeguards necessary for the prevention of frauds. 
  • RBI also forwards the details of frauds of an ingenious nature not reported earlier so that banks could introduce necessary safeguards by way of appropriate procedures and internal checks.
  • It is a continuous process that banks report to the Reserve Bank full information about frauds and the follow-up action taken thereon.

Classification of Fraud based on the provisions of the Indian Penal Code:

  • Misappropriation and criminal breach of trust.
  • Fraudulent encashment through forged instruments, manipulation of books of account or through fictitious accounts and conversion of property.
  • Unauthorised credit facilities extended for reward or for illegal gratification.
  • Negligence and cash shortages.
  • Cheating and forgery.
  • Irregularities in foreign exchange transactions.
  • Any other type of fraud not coming under the specific heads as above.

One must know:

  • The UCO Bank which is under the prompt corrective action (PCA) framework of RBI has reported a net loss of Rs 633.88 crore for the first quarter of this financial year.

Question:

Q. The Reserve Bank of India (RBI) has imposed Rs 2 crore penalty on which bank for non-compliance of instructions issued by RBI on the collection of account payee instruments and those on frauds-classification and reporting?
a. Dena Bank
b. Vijaya Bank
c. UCO Bank
d. United Bank
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