Reserve Bank of India (RBI) has imposed penalties on Punjab National Bank (PNB) and four other banks for non-compliance with RBI directives in the first week of July, 2024.
According to the Economic Times Report, PNB received a penalty of Rs 1.31 crore, making it the fifth bank penalized by the RBI.
“The Reserve Bank of India (RBI) has, by an order dated July 03, 2024 imposed a monetary penalty of ₹1,31,80,000 (Rupees One crore thirty one lakh eighty thousand only) on Punjab National Bank (the bank) for non-compliance with certain directions issued by RBI on ‘Loans and Advances – Statutory and Other Restrictions’, and ‘Reserve Bank of India (Know Your Customer (KYC) Direction, 2016,” said RBI in a press release dated 5 July, 2024.
Advertisement
The other banks that were fined are the Bank Employees’ Co-operative Bank in West Bengal, the National Co-operative Bank in Mumbai, the Rohika Central Co-operative Bank in Madhubani, Bihar, and the Gujarat Rajya Karmachari Co-operative Bank.
Further RBI conducted a Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank’s financial position as of March 31, 2022.
Following this inspection, the bank received a notice based on supervisory findings indicating non-compliance with RBI directions. The central bank instructed the bank to explain why penalties should not be imposed for failing to comply with these directions.
After reviewing PNB’s response to the notice and hearing their oral submissions, the RBI concluded that the charges against the bank were justified. Therefore, the RBI imposed a monetary penalty on Punjab National Bank.
Also Read: Why has RBI fined ICICI Bank and YES Bank?
The penalty came from PNB’s sanctioning of working capital demand loans to two state government-owned corporations, using amounts expected from the government as subsidies, refunds, or reimbursements. This action was considered a violation of RBI directives.
Additionally, the Reserve Bank of India noticed that PNB failed to maintain records related to customer identification and addresses acquired during business dealings in specific accounts.
Want to learn the art and science of managing your money? The 1% Club can help. Details here
