RBI imposes ₹68.20 Lakh Penalty on Punjab & Sind Bank for irregularity in Savings Accounts
The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹68.20 lakh on Punjab & Sind Bank for failing to comply with certain RBI regulations. The penalty was issued under the Banking Regulation Act, 1949, specifically under Sections 47A(1)(c), 46(4)(i), and 51(1).
Why Was the Penalty Imposed?
RBI conducted a Statutory Inspection for Supervisory Evaluation (ISE 2023) based on the bank’s financial position as of March 31, 2023. During the inspection, non-compliance with RBI’s directions was identified in the following areas:
- Failure to Report Large Exposures – The bank did not report borrowers with non-fund-based exposure of ₹5 crore and above to the Central Repository of Information on Large Credits (CRILC), which is required for tracking large common exposures across banks.
- Irregularities in Savings Bank Accounts – The bank allowed certain Basic Savings Bank Deposit Account (BSBDA) holders to open additional Savings Bank Deposit Accounts, which is against RBI guidelines on financial inclusion.
RBI’s Investigation and Decision
After detecting these violations, RBI issued a show-cause notice to Punjab & Sind Bank, asking for an explanation. The bank submitted its reply, additional clarifications, and oral representations during a personal hearing. However, after reviewing the bank’s responses, RBI determined that the charges were valid, leading to the imposition of the penalty.
Clarification from RBI
RBI clarified that the penalty is based on deficiencies in regulatory compliance and does not affect the validity of any transactions or agreements made by the bank with its customers. Additionally, this action does not prevent RBI from taking further measures if required.
This penalty highlights RBI’s strict monitoring of regulatory compliance and reinforces the importance of banks following reporting and financial inclusion guidelines to ensure transparency and accountability in the banking sector.
