Punjab National Bank Faces ₹72 Lakh Fine from RBI for Violating Directions on Interest Rate and Customer Service Rules

The Reserve Bank of India (RBI) has imposed a monetary penalty of ₹72 lakh on Punjab National Bank. This action was taken due to the bank’s non-compliance with specific provisions outlined in three RBI directives: ‘Reserve Bank of India (Interest Rate on Deposits) Directions, 2016,’ ‘Reserve Bank of India (Interest Rate on Advances) Directions, 2016,’ and the ‘Master Circular on Customer Service in Banks.’

The RBI exercised its authority under the provisions of Section 47 A (1) (c) in conjunction with Sections 46 (4) (i) and 51 (1) of the Banking Regulation Act, 1949, to impose this penalty. It’s crucial to note that this penalty is not intended to pass judgment on the validity of any transactions or agreements entered into by the bank with its customers but rather stems from identified regulatory compliance deficiencies. The RBI’s examination of the bank’s operations included the Statutory Inspection for Supervisory Evaluation (lSE 2021), which was conducted with reference to the bank’s financial position as of March 31, 2021.

During this inspection, a detailed review of the Risk Assessment Report, Inspection Report related to ISE 2021, and all relevant correspondence revealed several instances of non-compliance with the aforementioned directives. Specifically, the bank was found to have:

Charged SMS fees to certain accounts despite having outdated or inactive mobile numbers recorded in the Core Banking Solution (CBS). Not adhered strictly to the predetermined schedule of interest rates for various term deposit accounts. Failed to specify the interest reset date in MCLR-linked loans. In light of these findings, the RBI issued a notice to Punjab National Bank, prompting the bank to provide justifications as to why a penalty should not be imposed for its failure to comply with the aforementioned directives.

The bank responded to the notice and participated in a personal hearing during which oral submissions were made. After considering the bank’s responses and the oral submissions, the RBI concluded that the charges of non-compliance with the RBI directives were substantiated and warranted the imposition of a monetary penalty.

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