RBI Imposes 27.5 Lakh Monetary Penalty on this Public Sector Bank; Check Name of Bank

RBI Imposes 27.5 Lakh Monetary Penalty on this Public Sector Bank; Check Name of Bank The Reserve Bank of India (RBI) levied a monetary penalty of Rs 27.50 lakh (Rupees Twenty-seven lakh and fifty thousand only) on Punjab & Sind Bank (the bank) for non-compliance with specific RBI guidelines on 'External Benchmark Based Lending' in an order dated June 01, 2022. This penalty was issued in accordance with RBI's authority under section 47 A (1) (c) of the Banking Regulation Act, 1949, as well as sections 46 (4) I and 51 (1). (the Act). This action is based on regulatory compliance issues and is not meant to be a judgment on the legitimacy of any transaction or agreement between the bank and its customers. Background The Statutory Inspection for Supervisory Evaluation of the bank was conducted by RBI 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. In furtherance to the same, 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, as stated therein. 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 of non-compliance with the aforesaid RBI directions was substantiated and warranted imposition of monetary penalty, to the extent of non-compliance with such directions.