RBI Penalizes Five Banks, Including PNB, for Regulatory Non-Compliance in July

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In the first week of July, the Reserve Bank of India (RBI) penalized five banks, including Punjab National Bank (PNB), for failing to comply with various RBI regulations.

PNB was fined Rs 1.31 crore for violating directives related to ‘Loans and Advances: Statutory and Other Restrictions’ and the ‘Reserve Bank of India (Know Your Customer (KYC) Direction, 2016’.

Prior to penalizing PNB, the RBI imposed fines on four cooperative banks with varying amounts.

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These banks are 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.

RBI Penalizes Five Banks, Including PNB, for Regulatory Non-Compliance in July - Chandigarh City News

The penalty against PNB was issued on July 3, 2024.

The RBI stated, “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.”

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“This penalty has been imposed under the powers conferred on RBI by 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 added in a statement released on Friday.

The bank underwent a Statutory Inspection for Supervisory Evaluation (ISE 2022) by the RBI, based on its financial status as of March 31, 2022.

Following findings of non-compliance with RBI directions, a notice was issued to the bank to explain why a penalty should not be imposed.

After reviewing the bank’s response and hearing oral submissions, the RBI determined that the charges were valid, justifying the monetary penalty.

The RBI found that Punjab National Bank had approved working capital demand loans to two state government-owned corporations against receivables from the government in the form of subsidies, refunds, and reimbursements, which contravened RBI directives.

Additionally, PNB failed to maintain records related to the identification of customers and their addresses in certain accounts. The RBI’s actions are based on regulatory compliance deficiencies by Punjab National Bank.

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