RBI Fines Punjab National Bank and Four Others for Breaking Rules

The Reserve Bank of India (RBI) has penalized five banks, including Punjab National Bank (PNB), in the first week of July for not following various RBI directions.

Details of the Penalty

PNB was fined Rs 1.31 crore for not complying with RBI’s guidelines on ‘Loans and Advances: Statutory and Other Restrictions’ and ‘Know Your Customer (KYC) Direction, 2016’. The penalty was imposed on July 3, 2024.

Other Banks Penalized

Before PNB, four cooperative banks were fined:

• The Gujarat Rajya Karmachari Co-operative Bank, Gujarat
• The Rohika Central Co-operative Bank, Madhubani, Bihar
• The National Co-operative Bank, Mumbai, Maharashtra
• The Bank Employees’ Co-operative Bank, West Bengal

Reason for Penalty

The RBI conducted an inspection of PNB’s financial position as of March 31, 2022. It found that PNB had sanctioned loans against amounts receivable from the government, which is against RBI rules. PNB also failed to keep proper records of customer identification and addresses.

After considering PNB’s response and a personal hearing, the RBI decided to impose the penalty due to these regulatory compliance deficiencies.