MUFG bank was brought to book for non-compliance with its directions on ‘Loans and Advances – Statutory and Other Restrictions’, by the Reserve Bank of India (RBI). India’s central bank has imposed a monetary penalty of ₹30 Lakh on MUFG Bank Ltd. “This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47 A (1)(c) read with sections 46 (4) (i) of the Banking Regulation Act, 1949 (the Act)”, mentioned in the press release published by RBI on December 24, 2021.
Mitsubishi UFJ Financial Group / MUFG Bank was ranked as the largest bank in Japan and the fourth largest in the world.
RBI, in the press release, added that the bank’s inspection (with reference to its financial position as of March 31, 2019) revealed, inter alia, non-compliance with the aforesaid direction to the extent that it had sanctioned loans and advances to companies whose board of directors included person(s) who were director(s) on boards of other banks, without such sanctions being accorded at the level of its management committee.
Thenceforward a notice was issued to the bank to give an account for why a penalty should not be imposed on it for non-compliance with the RBI direction.
“After considering the bank’s reply to the notice, oral submissions made during the personal hearing and additional submissions made by the bank, the RBI came to the conclusion that the charge of non-compliance with the aforesaid RBI direction was substantiated and warranted imposition of monetary penalty,” the central bank said.
RBI highlighted that its action is based on the 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.
