RBI fined five Indian banks for non-compliance in first week of July

In the first week of July, the Reserve Bank of India (RBI) took action against five banks for non-compliance with various RBI rules. The latest bank to be penalized was Punjab National Bank (PNB), which was fined Rs 1.31 crore.

The penalty was imposed as PNB failed to comply with RBI regulations on loans and advances and the Reserve Bank of India’s Know Your Customer (KYC) Direction, 2016.

Before the introduction of PNB, the RBI had penalised four cooperative banks in Gujarat, Madhubani, Bihar, Mumbai and West Bengal for non-compliance.

Penalties varied across banks, revealing a worrying pattern of non-compliance across the banking sector.

The RBI examined PNB’s financial position as on March 31, 2022, and found that it had not complied with RBI rules. The RBI then asked PNB to explain why it should not be fined.

After PNB responded and held a hearing, the RBI still believed the bank should be fined. The RBI found that PNB had made loans to two state government-owned companies when it should not have done so, and that PNB had not kept accurate records of the identities and addresses of its customers.

RBI took strict action as PNB was not following the rules.