The Reserve Bank of India (RBI) has imposed penalties on three banks due to various regulatory non-compliances, emphasizing its commitment to enforcing financial regulations and ensuring the stability of the banking sector.
The central bank’s actions included:
- Punjab and Sind Bank was penalized ₹1 crore for deficiencies in its process of sanctioning term loans.
- Dhanlaxmi Bank incurred a fine of ₹1.2 crore for not complying with know-your-customer (KYC) norms, charging incorrect interest rates on deposits, and issues related to loans and advances.
- ESAF Small Finance Bank was fined ₹29.5 lakh for failing to adhere to customer service norms.
Why penalty on Dhanlaxmi Bank?
Dhanlaxmi Bank has sanctioned loans to certain borrowers against pledge of gold ornaments and jewellery for non-agricultural purposes exceeding 75 per cent of the value of gold ornaments and jewellery, offered interest rate applicable to normal term deposits on certain senior citizen term deposits instead of a higher rate of interest applicable to such deposits, hence penalised.
The bank also did not obtain PAN or Form 60 for certain term deposit accounts (exceeding fifty thousand rupees), and allotted multiple Customer Identification Codes to certain individual customers instead of a Unique Customer Identification Code (UCIC) to each customer, a release from the central bank said.
Why penalty on Punjab and Sind Bank?
Punjab and Sind Bank was penalised as it sanctioned a term loan to a Corporation in lieu of or to substitute budgetary resources envisaged for certain projects and without undertaking due diligence on the viability and bankability of the projects to ensure that revenue streams from the projects were sufficient to take care of the debt servicing obligations; and the repayment/servicing of which was made out of budgetary resources.
Why penalty on ESAF Small Finance Bank?
ESAF Small Finance Bank was penalised as the bank to the extent it allowed its certain Basic Savings Bank Deposit (BSBD) account holders to open savings bank deposit accounts and failed to close certain savings bank deposit accounts within 30 days from the date of opening of BSBD accounts for such customers.