RBI imposes Rs 1.31 cr fine on PNB

Mumbai: The RBI on Friday said it has imposed a monetary penalty of Rs 1.31 crore on Punjab National Bank for non-compliance with certain directions related to KYC and ‘loans and advances’.

The Reserve Bank said it conducted a statutory inspection of the bank with reference to its financial position as on March 31, 2022. A notice was issued to the bank.

After considering the bank’s reply to the notice, RBI said it found that PNB sanctioned working capital demand loans to two state government-owned corporations against amounts receivable from government by way of subsidies/ refunds/ reimbursements.

Also, the public sector lender failed to preserve the records pertaining to the identification of customers and their addresses obtained during the course of business relationship in certain accounts, the Reserve Bank said.

The central bank, however added the penalty is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transactions or agreement entered into by the bank with its

customers.

Moreover, the RBI has cancelled the licence of Shimsha Sahakara Bank Niyamitha, Maddur (Karnataka) in the wake of its worsening financial position.

Consequently, the bank ceases to carry on banking business, with effect from the close of business on Friday (July 05, 2024), the Reserve Bank said in a statement.

On liquidation, every depositor would be entitled to receive deposit insurance claim amount of his/her deposits up to Rs 5 lakh from Deposit Insurance and Credit Guarantee Corporation (DICGC).

As per the data submitted by the bank, RBI said about 99.96 per cent of the depositors are entitled to receive the full amount of their deposits from the DICGC.