Punjab National Bank Among 5 Banks Penalised By RBI For Non-Compliance

The Reserve Bank of India (RBI) has penalized five banks, including Punjab National Bank (PNB), in the first week of July for non-compliance with various RBI directions.

PNB became the fifth bank to be penalized, with a penalty of Rs 1.31 crore. This penalty was imposed for non-compliance with RBI directions regarding 'Loans and Advances: Statutory and Other Restrictions' and the 'Reserve Bank of India (Know Your Customer (KYC) Direction, 2016'.

Before PNB, the RBI penalized four cooperative banks with various penalty amounts. These banks include The Gujarat Rajya Karmachari Co-operative Bank, Gujarat; The Rohika Central Co-operative Bank, Madhubani, Bihar; The National Co-operative Bank, Mumbai, Maharashtra; and The Bank Employees' Co-operative Bank, West Bengal.

The penalty on PNB was imposed on July 3, 2024. The RBI said, "The Reserve Bank of India (RBI) has, by an order dated July 03, 2024, imposed a monetary penalty of Rs 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."

"This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of section 47 A (1) (c) read with sections 46 (4) (i) and section 51(1) of the Banking Regulation Act, 1949," the RBI said in a statement on Friday.

The Statutory Inspection for Supervisory Evaluation (ISE 2022) of the bank was conducted by RBI with reference to its financial position as on March 31, 2022. Based on supervisory findings of non-compliance with RBI directions and related correspondence, 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 directions.

The RBI said that after considering the bank's reply to the notice and oral submissions made during the personal hearing, RBI found that the charges against the bank were sustained, warranting imposition of monetary penalty.

According to the RBI, Punjab National Bank sanctioned working capital demand loans to two state government owned corporations against amounts receivable from Government by way of subsidies/ refunds/ reimbursements, it is a violation of RBI directions.

The PNB also failed to preserve records pertaining to the identification of customers and their addresses obtained during the course of a business relationship in certain accounts. The action by RBI is based on deficiencies in regulatory compliance by the Punjab National Bank.

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