This is the second time in four years that UBI has come under regulatory sanctions and is forced to take corrective measures for strains in financials.
In 2013, RBI had restricted the bank from lending freely after the then chairperson Archana Bhargava flagged off accounting malpractices.
The Kolkata-based government bank had net NPA ratio at 10 percent as on March which rose to 11.63 percent as on September 2017 , breaching the prescribed second level risk limit of 9 percent, which was the reason for inviting RBI direction.
The bank added that the normal banking activities such as acceptance of deposit, credit disbursement and treasury function remain unaffected.
United Bank reported a loss for two consecutive quarters now at Rs 345 crore for the September quarter that followed a Rs 211 crore in the first quarter of 2017-18 ending June, 2017.
Its asset quality deteriorated further with gross NPA at Rs 12,893 crore at the end of September, accounting for 18.80 percent of the total advances at Rs 68,562 crore. This is one of the weakest NPA ratios in the banking sector, other banks being IDBI Bank.
"The regulatory action is not likely to have any material impact on the bank's performance and will contribute to the improvement of the internal control and intrinsic strength of the bank," UBI added in its filing.