RBI Slaps PNB and Four Cooperative Banks with Penalties for Non-Compliance

The Reserve Bank of India (RBI) penalized five banks, including Punjab National Bank (PNB), for non-compliance with various guidelines. PNB received a penalty of Rs 1.31 crore for violating RBI's directions on 'Loans and Advances' and 'Know Your Customer' rules. Four cooperative banks were also penalized earlier.

The Reserve Bank of India (RBI) has issued penalties to five banks, including Punjab National Bank (PNB), during the first week of July for failing to comply with various regulatory directives. PNB was fined Rs 1.31 crore for non-compliance with RBI's 'Loans and Advances' guidelines and 'Know Your Customer (KYC) Direction, 2016'.

Prior to penalizing PNB, the RBI imposed penalties on four cooperative banks for similar violations. These banks are The Gujarat Rajya Karmachari Co-operative Bank in Gujarat, The Rohika Central Co-operative Bank in Madhubani, Bihar, The National Co-operative Bank in Mumbai, Maharashtra, and The Bank Employees' Co-operative Bank in West Bengal. The penalty on PNB was enacted on July 3, 2024. The RBI confirmed, "The Reserve Bank of India has, by an order dated July 03, 2024, imposed a monetary penalty of Rs 1,31,80,000 on Punjab National Bank for non-compliance with certain RBI directions."

The RBI enforced the penalties using its powers under section 47 A (1) (c) and sections 46 (4) (i) and 51(1) of the Banking Regulation Act, 1949. A Statutory Inspection for Supervisory Evaluation (ISE 2022) of PNB, conducted for its financial position as of March 31, 2022, revealed non-compliance, prompting RBI to demand an explanation from the bank. Even after reviewing PNB's response and oral submissions, RBI found sufficient grounds to impose the penalty. The violations included sanctioning loans against amounts receivable from the government and failing to preserve customer identification records.

This action indicates regulatory deficiencies within Punjab National Bank, underscoring RBI's commitment to enforcing compliance among financial institutions. (ANI)

(With inputs from agencies.)