RBI imposes penalties on Punjab National Bank, Federal Bank

The Reserve Bank of India on Friday imposed penalties on Punjab National Bank (PNB) and Federal Bank. While the private sector lender, Federal Bank, was slapped with a fine of Rs 30 lakh, the fine on state-run lender PNB was to the tune of Rs 72 lakh, according to separate releases by the banking regulator. 

The monetary penalty imposed on Federal Bank was for the lender’s failure to comply with the RBI’s know your customer (KYC) guidelines. 

“This penalty (on Federal Bank) has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Section 46 (4) (i) of the Banking Regulation Act, 1949. This 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,” said the RBI, which scrutinised Federal Bank based on a complaint.

The monetary penalty imposed on PNB was over certain provisions of the RBI’s directions on the interest rates applicable to deposits and advances, and its master circular on customer service in banks. “This penalty has been imposed in exercise of powers vested in RBI conferred under the provisions of Section 47 A (1) (c) read with Sections 46 (4) (i) and 51(1) of the Banking Regulation Act, 1949,” the RBI said. 

The RBI said the action on PNB was “based on the deficiencies in regulatory compliance” and was “not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers”.