The Reserve Bank of India (RBI) imposed a ₹1.32 crore penalty on Punjab National Bank (PNB) for violating regulatory guidelines. This penalty follows a Statutory Inspection for Supervisory Evaluation (ISE 2022) conducted by the RBI to assess PNB’s financial health as of March 31, 2022.
Violations Identified by RBI
- Improper Loan Approvals: PNB-sanctioned working capital demand loans to two government-owned corporations based on anticipated subsidies, refunds, or reimbursements from the government. RBI regulations prohibit such practices.
- Customer Identification Lapses: The bank failed to properly maintain customer identification records and addresses for certain accounts. This is a critical regulatory requirement to ensure Anti-Money Laundering (AML) compliance.
RBI’s Penalty Process: After the inspection, RBI issued a notice to PNB highlighting non-compliance with its directions. The notice provided an opportunity for the bank to explain why the penalty should not be imposed. After due consideration, RBI imposed a penalty of ₹1.32 crore.
This action by RBI underlines its commitment to maintain financial stability and ensure compliance with regulatory guidelines by banks. Such penalties serve as a deterrent to prevent future non-compliance and promote responsible banking practices.
