By an order dated 03-07-2024, the Reserve Bank of India (‘RBI’) imposed a monetary penalty of Rs. 1,31,80,000 on Punjab National Bank (‘PNB’) for non-compliance with certain directions issued by RBI on ‘Loans and Advances — Statutory and Other Restrictions and the RBI (Know Your Customer) Direction, 2016.
Background
The Statutory Inspection for Supervisory Evaluation of PNB was conducted by RBI with reference to its financial position on 31-03-2022.
After consideration of the reply given by PNB to the show cause notice issued to them, RBI found that the charges against PNB were sustained and called for the imposition of a monetary penalty.
The charges against PNB were:
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It sanctioned working capital demand loans to two State Government owned corporations against the amount’s receivable from the Government through subsidies/refunds/reimbursements.
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It failed to preserve the records related to the identification of customers and their addresses obtained by them during the course of business relationships in certain accounts.
RBI further clarified that this action was based on deficiencies in regulatory compliance and is not related to the validity of any transaction or agreement that PNB may have entered into with its customers.
