RBI Penalizes PNB for Non-Compliance with Regulations

  • 08 Jul 2024

On July 3rd, 2024, Punjab National Bank (PNB) became the fifth bank to be penalized, with a penalty of Rs 1.31 crore 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.’

Key Points

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