RBI slaps penalty on Punjab and Sind Bank: 5 things customers should know

The RBI said in a statement that it has imposed a penalty of Rs 27.5 lakh on Punjab & Sind Bank.

New Delhi: The Reserve Bank of India (RBI), on Friday (June 3), said in a statement that it has imposed a penalty on Punjab & Sind Bank. The bank added that the fine was levied on the public sector lender for non-compliance with certain directions issued by it on 'external benchmark-based lending'. “This penalty has been imposed in exercise of powers vested in RBI 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 Act),” the RBI said in its statement. 

5 things to know about RBI’s penalty on Punjab and Sind Bank

1. RBI has imposed a penalty of Rs 27.50 lakh on Punjab and Sind Bank. 

2. Punjab and Sind Bank should note that the RBI’s “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.”

3. RBI added that a statutory examination of Punjab & Sind Bank revealed non-compliance with the directions, 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 after October 1, 2019, to MCLR instead of an external benchmark. 

4. RBI has also issued a show cause notice to the bank. Also Read: Bank FD: HDFC Bank vs PNB vs IDFC Bank; Check latest interest rates

5. "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 ... Was substantiated and warranted imposition of monetary penalty...," RBI said. Also Read: EPF interest rate at 40-year low! Should you opt out of EPF? Check benefits, disadvantages