RBI Imposes Penalty on PSB

Reserve Bank of India imposes monetary penalty on Punjab & Sind Bank

The Reserve Bank of India imposed a monetary penalty of ₹27.50 lakh on Punjab & Sind Bank for non-compliance with certain directions issued by RBI on External Benchmark Based Lending. 

Recently RBI Conducted Statutory Inspection for Supervisory Evaluation of the bank with reference to its financial position as on March 31, 2020, and the examination of the Risk Assessment Report, Inspection Report and all related correspondence pertaining to the same, revealed non-compliance with the directions issued by RBI, inter-alia, to the extent the bank linked certain floating rate retail loans and floating rate loans to Micro and Small Enterprises, extended by it on or after October 01, 2019, to MCLR instead of an external benchmark. 

A notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for failure to comply with the directions issued by RBI, 

After considering the bank’s reply to the notice, oral submissions made in the personal hearing and examination of additional submissions made by it, 

RBI came to the conclusion that the charge for action is based on the deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.RBI Imposes Monetary Penalty.